Standing Committee B

[Mr. Win Griffiths in the Chair]

Armed Forces (Pensions and Compensation) Bill

Clause 1 - Pension and compensation schemes: armed and reserve forces

Amendment proposed [3 February]: No. 1, in 
clause 1, page 1, line 3, after 'establish', insert 'and modify'.—[Mr. Gerald Howarth.] 
 Question again proposed, That the amendment be made.

Win Griffiths: I remind the Committee that with this we are discussing the following:
 Amendment No. 2, in 
clause 1, page 1, line 3, after 'schemes', insert 
 'in accordance with the provisions of Schedule [Armed Forces Pension Scheme].'. 
Amendment No. 3, in 
clause 1, page 1, line 5, after 'for', insert 'defined'. 
New schedule 3—'Armed Forces Pension Scheme Membership— 
Introduction 
 1 The new AFPS is a defined benefit scheme which is non-contributory. It has common terms for both officers and other ranks with a normal retirement age of 55. 
 2 All members of the regular Armed Forces will automatically be members of the AFPS from their first day of service regardless of age. Exceptions to this are: 
 (1) Personnel who are eligible, but elect not to join the AFPS; 
 (2) Reservists who are members of the reserve Forces Pension Scheme; 
 (3) Where a member has completed less than two years reckonable service and leaves, he or she may either be bought back into the State Second Pension (S2P), or allowed to transfer notional pension rights to another pension arrangement, thereby relinquishing membership of the AFPS. 
 Opting out of the AFPS 
 3 Membership will not be compulsory. A Service man or woman may opt to join the S2P, a personal pension scheme or Stakeholder pension during his or her period of service. Any period of service completed whilst an individual has opted-out of the AFPS will not count towards benefits available under the AFPS. However, there will be no employer contributions paid by the Ministry of Defence for such alternative arrangements (other than those required under National Insurance terms for contracting in and out of the State Second Pension) and no personal contribution to the AFPS that can be refunded. 
 4 An individual who opts out will continue to be eligible for Attributable benefits under the new Armed Forces Compensation Scheme. 
 5 Members will not be required to make a direct contribution from pay in respect of benefits payable under the AFPS. However, the independent Armed Forces Pay Review Body (AFPRB) currently makes an adjustment to comparator pay (an abatement 
of 7 per cent. since 2001) to reflect the extent to which AFPS benefits are better or worse than those offered in a range of comparator occupations. 
 Pay and Service 
 Pay for Pension Purposes 
 6 The highest pensionable earnings will in most cases be in the final 12 months of service before retirement. However, the last three tax years will also be considered, with pensionable earnings in years one and two increased by inflation and, if giving a higher figure than that in the last 12 months, used as the basis for the pension calculation. 
 Reckonable Service 
 7 For the new AFPS reckonable service will be all service, as defined below, from the date of joining the AFP Scheme: 
 (1) Full pay service in the Armed Forces of the United Kingdom. 
 (2) Periods of full pay for the purposes of training. 
 (3) All paid leave. 
 (4) All paid maternity leave. 
 (5) Any period in which a woman member is in receipt of statutory Maternity Pay, even when the Maternity Pay continues beyond the end of a pensionable commitment. 
 (6) Paid paternity leave. 
 (7) Paid adoption leave. 
 (8) Notional years of service credited as a result of a transfer value payment from another pension scheme. 
 (9) Notional years of service credited as a result of the purchase of an Added Years Additional Voluntary Contribution (AVC). 
 (10) All subject to a member's reckonable service not exceeding 40 years. 
 8 Reckonable service will not include: 
 (1) Service forfeited by desertion unless such service is subsequently restored. 
 (2) Any period for which pay is forfeited for reasons related to service discipline. 
 (3) Military imprisonment or detention if greater than seven days. 
 (4) Service in respect of which a pension is already in payment. 
 Qualifying Period 
 9 The current scheme has a qualifying period of two years service of entitlement to a preserved pension, to avoid burdensome administration of very low value pensions. No final decision has been reached on whether the vesting period in the new scheme will be changed; this will be dependent on the final decisions on the Government's proposals for pension simplification and will take account of a range of other factors. Current arrangements allow for a cash equivalent premium to buy back into the State Second Pension or a transfer value to another occupational scheme to be made in respect of those who do not serve the two-year qualifying period and are compatible with the Government's current proposals. 
 Member Benefits 
 Benefits where the member leaves service at or after the Normal Pension Age of 55 
 10 A member leaving service at or after the normal pension age of 55 will be awarded a pension with immediate effect, with both a pension and a tax-free lump sum of three times pension. The pension paid will be based on accrued reckonable service at the point of retirement. There is an upper limit of 40 years of accrual at a rate of 1/70th of pensionable pay for each year of full service to allow longer-serving members to continue accruing benefits. Measures will be provided to allow those with less than 37 1/2 years service at age 55 to achieve a full career pension of two-thirds of salary. 
 Benefits where the member leaves service at or after the early departure point but before age 55 
 11 A member leaving service at or after the Early Departure Point (EDP), after 18 years' service or age 40 whichever is later, will be awarded a preserved pension and lump sum, which will come into payment at age 65. In addition, to compensate for loss 
of earnings, a lump sum award will be paid at the time of leaving the Armed Forces and income payments will be paid (the exact pattern yet to be agreed with the three Services) until the preserved pension comes into payment at age 65. These arrangements will be broadly similar in structure to the current Immediate Pension arrangements, though with some reduction in overall cost to help fund improvements elsewhere (notably to dependants' benefits) and the cost of pensioners living longer. This pension will be uprated for inflation at 65 by the RPI between the member leaving the Armed Forces and his 65th birthday. 
 Benefits where the member leaves service before the EDP (except ill-health) 
 12 A member leaving service after two years but before the EDP will be awarded a preserved pension consisting of an annual pension calculated as reckonable service x accrual rate (1/70th) x final pensionable earnings, and a tax-free lump sum of three-times annual pension. This will not be paid until age 65.This pension will be uprated for inflation at 65 by the RPI between the member leaving the Armed Forces and his 65th birthday. 
 Inverse Commutation 
 13 A member can choose to forego all or part of their lump sum in order to enhance his or her pension. The amount forfeited will be actuarially converted to additional pension, payable over the lifetime of the pensioner. The individual can opt just to improve their own pension income or to also improve that of their spouse or partner and the calculation will therefore be done on an individual basis. 
 Early payment of preserved pension 
 14 Where a member with a preserved pension, who is not in any pensionable employment, becomes incapacitated through ill-health and is permanently incapable of undertaking any further full-time employment, application can be made for the preserved pension to come into payment early. 
 15 Any award will be subject to the MoD's Medical Adviser being satisfied with the medical prognosis and an independent assessment may be required. The award will be calculated on actual reckonable service with no enhancements, but will be uprated for inflation from the point of payment.

Ill-Health Benefits - Non-attributable ill-health benefits

General Invaliding Benefits 
 16 A Member serving within the Armed Forces with reckonable service of less than 2 years will have no entitlement to an award in the case of non-attributable invaliding. 
 17 A member serving within the Armed Forces who is invalided with reckonable service of at least two years may be awarded an ill-health pension or gratuity. The benefits will be calculated according to the level of ill-health. 
 18 Invaliding pensions will be index-linked as soon as they come into payment. 
 19 The ill-health pension benefits will be calculated according to the level of ill-health. 
 Tier 1 
 20 Members invalided out of the Service because they are unable to do their Service job, but whose earnings capacity in civilian life is not affected, will be awarded a gratuity. The gratuity will be related to the member's salary and the number of years served. The gratuity will vary with the length of service, calculated as 1 months' pensionable pay for each year's service with a minimum payment of six months' pensionable pay and a maximum payment of two years' pensionable pay. The purpose of the gratuity is to help the member adjust to his/her new circumstances. However, if the member has passed the EDP, he/she would receive an Early Departure lump sum and income payments (see section 3) up until age 65 when the preserved pension comes into payment.
 Tier 2 
 21 Members who are invalided out with an impairment that significantly affects their earnings capacity in civilian life will be awarded a pension lump sum and an ill-health pension enhanced by one-third of their remaining service (based upon the normal retirement age of 55). 
 Tier 3 
 22 Members who are invalided out of the Service with a serious disability which renders them permanently incapable of any further employment will be awarded a pension lump sum and an ill-health pension enhanced by half of their remaining service (based upon the normal retirement age of 55) with a minimum pension guarantee of 20 years' accrued pension. 
 Attributable ill-health benefits 
 23 Attributable ill-health benefits will not be provided under the new AFPS.A separate Compensation Scheme has been set up which awards lump sums for pain and suffering and a Guaranteed Income Stream (GIS) for loss of earnings capacity. See separate framework document on the new Compensation Scheme for details. 
 24 It should be noted that when the GIS is calculated the level of ill-health pension is taken into consideration and the GIS abated to avoid double compensation. 
 Death Benefits (Lump Sums) 
 General 
 25 The scheme administrators will award a death in service benefit. A member may nominate a person to receive such a benefit and there will be provision for such nominations to be anonymous where there are personal sensitivities. If there is no currently valid nomination, scheme administrators may pay a Death-In-Service benefit to a spouse or registered partner (in the latter case subject to confirmation that a substantial relationship was extant at the time of death) or, where there is no spouse or registered partner, to dependent children. Where none of the above applies, a death-in-service benefit may be paid to the Member's estate. 
 Death-in-service 
 26 Where the death of a member occurs whilst he or she is in service, a lump sum gratuity of 4 times pensionable pay will be payable to his or her nominee. 
 Death in Deferment 
 27 Where a Service person has left the Armed Forces with a preserved pension, and subsequently dies before the pension comes into payment, this will be treated as a death in deferment. A gratuity equal to the preserved lump sum, uprated by pensions increases, will be payable to the nominee or otherwise. 
 Death within Five Years of Retirement 
 28 Subject to final decisions on the new taxation regime, where a death occurs within five years of the pension coming into payment, a lump sum payment equivalent to the balance of five years' worth of pension at its current rate less the lump sum received on retirement may be payable to the widow(er) or registered partner. For example, if a member died six months after a pension first came into payment, the widow(er) or registered partner might receive a lump sum equivalent to 1 1/2 years pension. 
 Dependant's Pension Benefits 
 Widows'/Widowers' Pensions 
 29 A widow/widower is the person to whom a member is legally married when he/she dies. A former wife or husband is not eligible to receive a widow/widower's pension. Registered unmarried partners are also eligible to receive a widow/widower's pension subject to the relationship being substantial at the time of death. These pensions are payable for life. This measure shall also apply to all existing non-attributable widows. 
 30 Death-in-service 
 Where a member dies in service, any eligible widow(er) or unmarried partner will receive a pension of up to 33.33 per cent. of the member's pensionable pay (equivalent to two-thirds of pension).This pension accrues over a period of up to 37/3 years (at an accrual rate of 1/112ths of pensionable pay for each year of service). Pensionable service is calculated as if the member had been invalided out of service at Tier 3 (pension enhanced by half 
of member's remaining service, based up on the normal pension age of 55) or, if greater, uses the member's actual pensionable service up to 37/3 years. There is a minimum pension guarantee of 20 years' accrued pension. 
 31 Death-in-Retirement (or deferment) 
 Where a member dies in retirement or before a preserved pension becomes payable, any eligible widow(er) or unmarried partner will receive the pension of up to 33.33 per cent. of the members' pensionable pay (equivalent to two-thirds of pension). This pension also accrues of 37/3 years (using an accrual rate of 1/112ths of pensionable pay for each year of service).However, pensionable service is based on the member's actual service plus service brought in through AVCs. 
 Children's Pensions 
 32 In the event of the member's death children's pensions may be payable in respect of natural or adopted children and other children where the member was the legal guardian and the child was financially dependent on the member. This would include children who are born or become eligible after retirement. 
 33 Where a pension is payable to a spouse or unmarried partner, an only child will normally receive 25 per cent. of the member's pension entitlement; two or more eligible children will normally share equally 37.5 per cent. of the member's pension entitlement. Where no pension is payable to a spouse or unmarried partner, normally an amount equal to the member's pension entitlement will be divided equally among his or her eligible children, with no child receiving more than one third of the member's entitlement. 
 34 A child's pension may cease when the child reaches age 17. However, it may continue, or be restored, whilst the child is in full-time education. It may also continue if it is determined that the child is incapable of earning his or her own living due to a mental or bodily infirmity and where the condition was diagnosed before the child reached the age of 17. Decisions are at the discretion of the scheme administrator. Where a child is eligible for several AFPS children's pensions (for example from several parents) only the two pensions of highest value may be awarded. 
 Transfers in and out 
 35 This section will apply to members who leave service with a preserved pension, or have not accrued two years qualifying service (but see para 2.4), and to members who join or re-join the new AFPS after having accrued pension benefits in another pension arrangement. Pension credits arising from a pension share may not be transferred in or out. 
 Transfers in 
 36 A member who joins or re-joins the new AFPS with pension benefits in another pension arrangement may apply to have those benefits transferred to the new AFPS, provided that the member applies within 12 months of joining the scheme. Transfers-in will not be accepted where an individual is under notice of invaliding or of discharge in some other way. 
 37 An individual who elects to transfer pension rights from another pension arrangement into the new AFPS will be credited with reckonable service in the new AFPS in respect of those transferred pension rights, calculated using tables prepared by the Government Actuary's Department. 
 38 The transfer value tables will be applied to the transfer value to give periods of reckonable service for personal pension, lump sum and widow(er)'s/partners' benefits. The length of reckonable service credited may, however, be restricted where the limits imposed from time to time by the Inland Revenue for approved occupational pension schemes or under AFPS rules for maximum reckonable service would otherwise be exceeded. 
 39 Where a member has pension rights under the new AFPS that have been credited to another pension arrangement by means of a transfer value payment and those pension rights are subsequently transferred back into the new AFPS, that service will buy the benefits determined by the scheme actuary as equivalent to the transfer payment made to the AFPS. Precise arrangements for transfers-in will be the subject of detailed further work. 
 40 Where service credited within the AFPS is less than service served in the exporting scheme, the calendar length of the previous service will count for the purpose of the two-year qualifying period 
for pension benefits. However, neither actual service in previous employment nor reckonable service credited in the AFPS will count towards the minimum period of service necessary for the award of Early Departure Payments or full pension. 
 Transfers Out 
 41 A member who ceases pensionable service or opts out of the new AFPS may elect to have his or her preserved pension rights transferred from the new AFPS to have another pension arrangement 
 (1) provided that the pension arrangement is approved for this purpose by the Inland Revenue; 
 (2) provided that it is prepared to accept the Transfer Value payment. 
 42 Application must be made before the member's 64th birthday, or within six months of the termination of a pensionable commitment, whichever is the later. Pensions in payment may not be transferred. Transfer Values for those leaving the new AFPS will normally be calculated using tables prepared by the Government Actuary's Department, the age at the time of the transfer value calculation and the value of the preserved pension credits as at that date. 
 AVCs 
 Additional Voluntary Contributions 
 43 AVCs can be used to top up AFPS benefits where the person's overall pension benefits are unlikely to exceed Inland Revenue limits. 
 44 The legislation on additional voluntary pension contributions, governing the requirements to provide and the scope to purchase, should be considered revised during the next year. In the light of those emerging proposals it will be decided what arrangements would be most appropriate for the new AFPS. 
 Pensions Increases 
 45 All pensions and lump sums awarded under the pension Scheme will be eligible to be increased by analogy with the terms set out in the 1971 Pensions (Increase) Act and appropriate Pensions Increase Orders. 
 General Provisions 
 Payment of pensions 
 46 Pensions will become payable on retirement from the Armed Forces at or after the normal pension age of 55, at any age on ill-health retirement under Tiers 2 and 3 (see section 4) or at age 65 for preserved pensions. 
 Diversion of pension 
 47 Pension benefits payable under the new AFPS may not be assigned to a third party, except where a court is making an order for financial provision in divorce proceedings. There are also general prohibitions on assignment for occupational pensions in section 91 of the Pensions Act 1995 and, in respect of Guaranteed Minimum Payment rights (which will continue), in section 159 of the Pension Schemes Act 1993. 
 48 If a member is unable to manage his or her affairs by reason of mental disorder, the Secretary of State may divert part, or all, of his or her pension to another person or institution for his or her care and maintenance and for the benefit of his or her dependants. 
 Forfeiture, Suspension or Withholding of Service Pension 
 49 At the discretion of the Defence Council, a member may forfeit their Service pension in the following circumstances: 
 (1) Conviction of one or more offences which are: 
 (a) Offences of treason; 
 (b) Offences under the Official Secrets Act 1911 to 1989 for which they have been sentenced to a term of imprisonment of at least 10 years or to two or more consecutive terms amounting in the aggregate to at least 10 years. 
 (2) Conviction of an offence committed in connection with their service as a member of the Armed Forces, including any which the Secretary of State for Defence considers to have been gravely injurious to the defence, security or other interests of the State.
 50 In exceptional circumstances, a payment not exceeding the amount of the Service Pension forfeited or suspended may be made by the Defence Council to, or for the benefit of, the spouse or other dependants of the member. 
 51 At the discretion of the Defence Council, pension benefits may be withheld from a widow(er) or unmarried partner, or if already in payment may be forfeited, if the member's widow(er) or unmarried partner is convicted of the murder, manslaughter or unlawful killing of that member. 
 Internal Dispute Resolution Procedures 
 52 Complaints against decisions made by the administrators of the new AFPS may be made under the scheme's Internal Dispute Resolution Procedures (IDRP). 
 53 Those eligible to complain under these procedures are: 
 (1) Serving members of the new AFPS; 
 (2) Members of the scheme who have left the Service; 
 (3) Dependants of deceased members of the scheme; 
 (4) Potential members of the scheme; 
 (5) A former spouse with pension credit rights from a pension share; 
 (6) Anyone claiming to be in any of the foregoing categories. 
 54 There will be two stages to the IDRP. Under the first stage, members of the scheme have the right to complain about a decision made by the scheme administrators. Complaints under this stage will be considered by the appropriate office within the Armed Forces Pay and Administration Agency. 
 55 Under the second stage, members of the scheme have the right to appeal to the scheme managers against the decision made on their complaint under the first stage. Complaints under this stage will be considered by the managers of the AFPS. 
 56 The details of the IDRP will be contained in Defence Council Instructions and pension scheme booklets.'.

Ivor Caplin: I welcome you to the Chair, Mr. Griffiths. As you know from our brief discussion last night, despite my extensive research, I have been unable to find a salient fact relating to your defence interests, except what you have told me about St. Athan, which is either very near to your constituency, or in it.
 I concluded our last sitting by saying to the hon. Member for Aldershot (Mr. Howarth) that I hoped we would have time later to discuss further the issue that we were then debating. Unfortunately, we have not been able to do so because of my visit to the west country at the end of last week, but I hope to clarify those issues for the hon. Gentleman and his hon. Friends this morning. We have spent two hours and 10 minutes debating the first group of amendments, and we are still debating them. I am sure that the Committee would like to make some progress, so I intend to move swiftly through my responses.

Gerald Howarth: Will the Minister give way?

Ivor Caplin: I have not said very much yet, but of course I will give way.

Gerald Howarth: I am most grateful. I, too, welcome you to the Chair, Mr. Griffiths.
 I cannot let the Minister get away with suggesting that progress has been slow. He knows full well that, if my hon. Friends had not tabled amendments, there would have been no opportunity whatever to debate 
 the Bill. He should recognise the fact that we have made considerable progress so far. To suggest that we have made poor progress is not accurate.

Ivor Caplin: I was not suggesting that. I was merely pointing out the facts—we have spent two hours and 10 minutes on this group. I was not commenting on progress. As my right hon. Friend the Secretary of State made clear on Second Reading, we are more than happy for amendments to be tabled, so that they can be fully discussed and scrutinised by the Committee. I welcome that, as did our response to the Select Committee report, which I quoted at the last sitting.
 At the end of that sitting, we were considering the question raised by the hon. Member for Aldershot as to the widows' group and the issue of non-attributable widows missing out on the new scheme. I think that I can clarify that point. He will be aware that in October 2000 the attributable widows were allowed to keep their pensions for life on remarriage or cohabitation. That group was seen as being exceptional because of the nature of their spouses' deaths. 
 It is normal policy for public service schemes to cease widows' pensions on remarriage. The improvements that we have been able to make with the new scheme have been paid for by restructuring benefits—the hon. Gentleman knows that from previous exchanges—but there are no compensating offsets in the current armed forces scheme to pay for that improvement. I hope that shows that we recognise the special status of the armed forces and that it is not possible to distinguish between the widow of a serviceperson, policeman or doctor who died off duty or due to natural causes. 
 The hon. Gentleman also asked me about the War Widows Association of Great Britain. I confirm that we have no intention of replacing the term ''war widows'' in respect of those widows who receive benefits relating to their partner's death due to service. 
 I am glad to see that the hon. Member for New Forest, West (Mr. Swayne) is here—no doubt after his early morning exercise. Last week, he asked about forfeiture of pay. It is a basic principle of UK defined benefit pension schemes that only periods of paid service are reckonable for pension, so if a serviceman forfeits pay—for example, as a punishment for a disciplinary offence—the period for which pay is forfeited is not reckonable for pension. Such periods, as he will recognise, are generally short, and the effect this would have on the final amount of an individual's pension is very small indeed. 
 We also heard a number of comments on full career pension after 35 years. I want us to talk briefly about the issue of the Inland Revenue limit of 66 2/3 per cent. That figure is a maximum, not necessarily a target, and under current plans for pension reform this limit will not exist from April 2005. As only about 10 per cent. of officers and just under 2 per cent. of other ranks serve a full career, the matter of what is the level of a full career pension does not affect many people. We have, however, extended the accrual period in the new scheme to allow up to 40 years of reckonable service, which means that those few long-serving members can accrue over 70 per cent. of pensionable pay. It is not 
 going to be possible to bring the full career pension for 35 years up to the current Inland Revenue limit within the available funding, so the headroom of up to 40 years means that those who want to increase the value of their pension to 66 2/3 per cent. can make additional voluntary contributions to achieve that. We began to touch on that matter last week. 
 We also had a brief discussion about the early departure plan and, in particular, its index linking of preserved pensions. I hope all members of the Committee received the notes I sent out last week about that plan. I am sure we will have a long and interesting discussion about it when we debate new clause 9. What the note makes clear, and what I put on record this morning, is that from age 55 the income payments will be adjusted to take account of the changes in the retail prices index since the point at which the early departure payments scheme was originally taken, and thereafter on an annual basis until the preserved pension comes into payment at age 65. That is in line with the treatment of the current immediate pension scheme.

Julian Brazier: May I raise a point on that through you, Mr Griffiths? The Minister very courteously issued us—at last—with figures on the early departure scheme, just before the last sitting of the Committee. He refers to the fact that he is looking forward to the debate on the scheme, but that raises a problem for us: new clause 9, which has been selected, simply reflects the Government's view. We had to table that view within an Opposition new clause because the Bill does not refer to the early departure scheme.
 We tabled two proposals reflecting the changes to the scheme that we would like to be made—new clauses 10 and 11, neither of which has been selected. Were a fresh wording to be tried to reflect possible changes, could those measures be selected so that we can debate the scheme at a later point?

Win Griffiths: May I point out the fact that the Opposition have tabled new clause 26, which deals with that matter? As it is a starred new clause, we have not been able to select it as yet. A bit of patience is required, perhaps.

Julian Brazier: Thank you very much, Mr. Griffiths.

Ivor Caplin: I am glad that we have been able to clear that up for the hon. Member for Canterbury (Mr. Brazier). This is convenient, because I am now on to accrual rates, which he asked me about last Tuesday, although I shall spare the Committee a lengthy lecture on superannuation accrual rates, as last week some of my hon. Friends pleaded with me to do so. They said that they had all read the Select Committee report, which details the rates at length.
 Under the current scheme, officers have a much faster accrual rate up to the immediate pension point of 16 years' service. From that point, the rate tapers off as the individual moves towards the usual age of retirement. That does not affect other ranks, who have a broadly even rate of accrual. In the case of a full career up to the age of 55, the accrual rates are broadly 
 the same for the two schemes. As I said last Tuesday, all those currently serving can choose whether to transfer to the new scheme. Each individual will need to take account of the various changes proposed under the new scheme. 
 Last week, the hon. Member for New Forest, West also asked about pension troughs and how much it might cost to revisit the issue. That is a difficult figure to calculate, but we are talking about a group of pensioners affected in the mid-'70s by various decisions taken by the Government of the day. We believe that it would cost about £65 million to correct, including spouses' benefits. 
 The assessment was made using standard actuarial demographic and investment assumptions, but it did not include the cost of retrospectivity—increasing pension payments that have already been paid. This is only one of several troughs affecting the armed forces. I must say to the hon. Gentleman and to the Committee that there would be real and significant difficulties in retrospectively changing benefits in public sector pension schemes, including with affordability. I cannot see how this Government or any previous Government could think it, or have thought it, right and proper to spend public money on retrospectivity. I have no plans to do so. 
 A question was also asked about earnings in the last three years of service.

Julian Brazier: The Minister has raised two points, the second of which relates to retrospectivity. Before he leaves the first point entirely, may I take him back to the beginning of his speech when he said that this is a matter of choice and that no serving personnel had to join the new scheme? For the benefit of the Committee, and in case of any doubt, will he confirm that the accrual rate on all future service will be reduced, whether people transfer to the new scheme or stay in the old one?

Ivor Caplin: I do not believe that that is true, but I will have to come back to the hon. Gentleman as I want to make one or two other points.
 Hon. Members asked about earnings in the last three years of service, whether the proposal is fair and what will count. An individual's pensionable pay, not extra pay such as flying pay, counts. That is absolutely consistent with other public sector pension schemes.

Desmond Swayne: Has the Minister taken account of the fact that military pay, unlike pay in other public sectors, increasingly takes account of the special responsibilities of servicemen? That is certainly the case with Pay 2000, so surely the Minister's approach to the issue should be slightly more flexible?

Ivor Caplin: This is how it works: taking the best of the last three years of service means considering the highest figure for pensionable earnings with the earliest two years of service, properly uprated for inflation and RPI, and the highest figure counts in pension calculations. In most cases, pensionable earnings in the last 12 months will be the highest. One
 change that we are not discussing in this debate is the use of salary, not the hypothecated rates that we use under the current scheme.
 Let me comment on the amendments. Amendment No. 1, which I have already dealt with in detail, concerns the right of the Secretary of State to modify schemes. That right is implicit in the legislation, so it is not necessary to specify it in the way suggested in the amendment.

Gerald Howarth: Will the Minister point out where in the Bill there is a specific power for the Secretary of State to modify?

Ivor Caplin: It is implicit. The Interpretation Act 1978 makes it clear that express power to make statutory instruments includes the power to invoke, amend or re-enact them. Because of the implied powers, amendment No. 1 is unnecessary and I urge the Committee to resist it, although I hope that the hon. Gentleman will accept my explanation and withdraw it.
 Amendment No. 3 would prevent the new scheme from offering non-defined benefit additional voluntary contributions. Technically, it would also apply to the early departure scheme, for which the term ''defined benefits'' has no meaning. Even if it were to apply more narrowly, the Government would not consider it appropriate. The Secretary of State made it clear on Second Reading—and I repeated it last week—that, for many of the reasons we have stated, it is inappropriate to introduce scheme details in primary enabling legislation. The approach that we propose is consistent with that adopted by most of the other public service pension schemes, with enabling legislation and scheme rules set out in secondary legislation. That is sensible and I hope that the Committee will reject the amendment if necessary, although I urge the hon. Gentleman to consider not pressing it. 
 The hon. Gentleman or one or two of his hon. Friends might have owned up to this last Tuesday: so far as I can see, new schedule 3 is a direct lift from our framework document, with a few minor changes. It has not been drafted as a legal document and it is not, therefore, suitable for its purpose. Scheme rules, particularly those for pensions and compensation, need to be precise, given that they confer rights on the individual. There should and must be clarity.

Andrew Robathan: When the Minister talks about clarity, I could not agree more. However, the problem with the clause—we might be debating amendments to it, but we are also considering the legislation—is that it has no clarity. Everything is in his gift—how can that be clear?

Ivor Caplin: I can reassure the hon. Gentleman: if he thinks that we have nearly finished debating the clause, he is much mistaken. I have a long clause stand part speech for him to enjoy later, and it will round up a lot of the issues. The hon. Member for Hereford (Mr. Keetch) will particularly enjoy it, I am sure. It will be
 more appropriate to pick up those issues at that point than to do so in relation to this narrow group of amendments.
 We intend to resist new schedule 3 because of how it would impact on primary and secondary legislation. We firmly believe that the approach that we suggest is the right one; it is consistent with those adopted for most other public service pension schemes. We discussed the matter on Second Reading—in broad terms, of course. 
 The arrangements that we have for armed forces pensions do not allow parliamentary scrutiny. Governments—I use the term generically—have not abused the schemes by introducing disadvantageous changes. Key changes that have been made in the past few decades have included extending the introduction of attributable benefits for ill health, injury and death to unmarried partners; improved widowers' benefits; post-retirement marriage benefits; and preserved pension entitlements. Also, I note that much of the language used in these proposals is based on our framework document, which was not written as a legal document and is therefore unsuitable for that purpose. 
 In concluding my remarks, I point out that, despite what the hon. Member for Aldershot thought I was starting to say, we have had a useful debate on the issues. I see no reason for the Government accepting any proposal in the group. Furthermore, given our lengthy debate, I hope that the amendment will not be pressed to Division. If it is, I shall ask my hon. Friends to reject it.

Andrew Robathan: I also welcome you to the Committee, Mr. Griffiths. I think that we were going to have lunch with the Indonesian ambassador today, but sadly that is not now the case. I also apologise for not attending the debate on Second Reading. I would have liked to do so, but sadly I was elsewhere on parliamentary business. I was also unable to attend the Committee's sitting last week, but I am sure that hon. Members understand the pressures we are under. Indeed, the hon. Member for Hereford was not present either, I recall.
 To dispel any doubts, I should again declare an interest, in that I am in receipt of an armed services pension. The amount is not huge—it would not get many people up in the morning—but I have been in receipt of it since 1989. It keeps coming in, every day and every night, throughout the year, whether I am under the arch at Charing Cross station or here. I am a beneficiary of the current scheme, so the changes will not affect me, but they would if I were 20 years younger and still serving. 
 The clause and the proposed amendment to it are the meat of the Bill, which, at the moment, is more like a skeleton. Everything is about enabling. I do not distrust the Minister or doubt his good intentions, but the purpose of parliamentary scrutiny is to ensure that the will of Parliament is done, rather than the will of a Minister at an arbitrary moment in the future. My hon. Friend the Member for Aldershot has done us a great service in tabling new schedule 3. Although it 
 may be based on the framework document, he has tried to say exactly what the Bill will mean for those currently serving and for those who will serve in future. 
 As has been said, pensions are not the reason why people join the armed forces. The situation would be distressing if people looked at the terms and conditions of service and said, ''Gosh! That's a really good pension. I think I'm going to serve in the Black Watch or the Coldstream Guards, because I'm really looking forward to getting my pension,'' be that at 55, 60 or 65. Nevertheless, the young people who join—we need young people rather than aged people such as me—expect to be looked after. They join for adventure, but later, when they think about their futures, as I did, they ask themselves what they have earned during their service of, say, 18 years. I was pleasantly surprised to discover how much I had earned, but young people who are thinking of joining now will discover that they accrue somewhat less. 
 We need to understand that the pension is part of a package, including the conditions of service, for which people join up. As we discussed last week, we know that pay is abated to take account of the fact that there is a pension. One does not see that on one's payslip, but pay is reduced because one contributes towards a pension. I would say that one in 100 of the young men who served with me, if that, knew that they were earning a pension at the time. They had never considered the matter, but their pay was nevertheless cut for that reason. 
 The clause and the amendment go to the heart of the issue. The Bill will undermine the package. That must be the case, because, as we shall discuss later, the situation is revenue neutral. However, we are providing extra for people who are not currently covered, particularly unmarried partners and others. If the situation is revenue neutral, the scheme's current beneficiaries must be losing out. I would have thought that that was simple logic. The cost will have to be met out of existing benefits. However, because there is nothing of substance in clause 1, it is difficult to see how it will affect people. It certainly will not improve conditions—that much is obvious. Indeed, my hon. Friend the Member for Aldershot made that point well on Tuesday last. One must therefore ask what the ordinary members of the armed forces will feel. 
 I suspect that in NAAFIs and messes throughout the country, or in Iraq or wherever else members of the armed forces may be, they are not discussing the Bill at great length. However, they will be saying that their political masters are yet again chipping away at what they have and undermining what they are doing. They will feel as I and the hon. Member for Falkirk, West (Mr. Joyce) felt—I am trying to make a cross-party point. One often feels undervalued by one's political masters. [Interruption.] I hear from a Labour Back Bencher, ''So do we all.'' It is somewhat like the tag given to the 14th Army in Burma—it was the forgotten Army. People sweating away in Iraq, Bosnia and Northern Ireland feel undervalued and the Bill will contribute to that feeling. 
 As has been said, the truth is that few young people will be needed until the age of 55. We do not want many old soldiers serving in the armed forces. Like me, they will be too old and they will not be fit. Only a small number will stay on. Nevertheless, all those who give service in their 20s and 30s—and even in their teens—should be well looked after by the House. As my hon. Friend the Member for Aldershot rightly pointed out, few of them will earn a full pension. 
 The Minister's answer—that those people can buy extra years—is not particularly good. Those who want a career through to the age of 55 should not have to buy extra years. That is a bit much. Hon. Members can earn a full pension in 25 or 26 years, and I believe that that should also be the case for members of the armed forces. Physically, they will have worked somewhat harder than we do, although perhaps with not such a great feeling of public service.

Ivor Caplin: How can the hon. Gentleman align that statement, which is as close to a public spending commitment as I have heard from any member of the Conservative party, with the dreamy nature of yesterday's widely covered speech by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard)?

Andrew Robathan: As a Back Bencher, I see myself entirely as a dreamy free spirit. I do not need to justify public service spending. However, if the Bill is cost-neutral, it will reduce the benefits of existing beneficiaries because it will cater for more people. Does the Minister deny that?

Ivor Caplin: I disagree. The point is that the new scheme has significant new benefits—that is the scheme that we are debating, not the current scheme. Yes, they will have to be paid for from the proposed overall package, but we cannot cherry-pick certain parts of it. We cannot say that we do not want a four times death-in-service benefit, but that we could go back to one-and-a-half times and put the benefits elsewhere. This comes as a package.

Andrew Robathan: The Minister will correct me if I am wrong, but is the compensation package not included in the full range of benefits? We hope that the number of people who will benefit from someone dying will be fairly small, but everyone will benefit from a pension. The existing beneficiaries of pensions will lose out—that much is certain. How can it not be the case?

Ivor Caplin: Current members of the armed forces, and people including my hon. Friend the Member for Falkirk, West and the hon. Gentleman, have a pension scheme. They will carry on with that pension. The provisions will have no impact on today's pensioners. Provided both Houses agree, the only impact of the Bill will be that, from 6 April 2005, those joining our armed forces will become members of the new scheme and existing members of the armed forces will have the choice whether to join that new pension scheme. From 6 April 2005, all compensation claims—this is where the Bill should be considered as having two parts—will
 be subject to the new compensation scheme, which is not relevant to the amendment, but which will be dealt with later.

Andrew Robathan: I do not want to stray out of order, but I note that on 3 February the Minister did not contradict my hon. Friend the Member for Canterbury, who said that
''existing service personnel who opt to stay in the old scheme will be significantly disadvantaged.'' 
Indeed, the Minister said: 
 ''I shall come on to accrual rates and other matters''—[Official Report, Standing Committee B, 3 February 2004; c. 41.] 
later in proceedings.

Ivor Caplin: I did.

Andrew Robathan: I do not think that the Minister did so particularly well, but I shall calm down for a second.
 As was mentioned earlier, we received a letter dated 2 February on the early departure scheme. That is not a measure that sprang from nowhere; indeed, it was considered at great length and the Select Committee was involved. Why are we still thinking on the hoof? This matter should of course be covered in the Bill. The Minister's Department has been discussing it for months, and we should have had much greater knowledge of it. I think he probably agrees with that. 
 To return to the measure involving accrual rates that the Minister bought up, he mentioned the Select Committee report. Those of us who sit on Select Committees know that they do excellent work. Mine, in particular, produces some first-class reports. However, I regret to say that most of those reports sit in the Library, or wherever they may be, gathering dust. The important thing is the legislation that we pass in the House and in this Committee. It is no good saying, ''Look at the Select Committee report,'' because people do not. The legal standing comes from the Bill. 
 I do not want to detain the Committee, because I know that there has been a long discussion on this group of amendments. These proposals make my point particularly well: so much has been left out of clause 1, and we owe it to our young men—and, indeed, women—in Iraq, Bosnia, Afghanistan, Northern Ireland or wherever else they may be to look after them. I was particularly fortunate, as I have said, but others will be less so. 
 My hon. Friend the Member for Aldershot has had a credible stab at the issue—I hope he does not mind me using such a term—but he does not have the backing of the cohorts of civil servants that the Government have when it comes to writing Bills. We, and the armed forces, need to know exactly what are the terms and conditions of service and how members of the armed forces will be disadvantaged by the legislation.

Desmond Swayne: Earlier, I asked whether the Minister would comment on the fairness of the arrangements for opting out as set out in the framework document. It is perfectly admissible for members of the scheme to
 opt out, but the Government would make no contribution to any other scheme that they might care to pay in to. Given the abatement that servicemen experience to pay, in effect, for the scheme, I asked the Minister to defend the fairness of it. He did not take the opportunity to do so. I wonder whether he might care to do so now.

Ivor Caplin: I am always grateful to the hon. Gentleman when he raises such issues. I thought that I had mentioned that matter, but perhaps it got lost in the barrage of papers that I was looking at this morning.
 I am sure that the hon. Gentleman has looked at my CV. He realises that I worked in the pensions industry in the late '80s, when I warned various people of the actions of the Government in relation to individual pensions. Those warnings proved, 10 years later, to be wholly correct. The idea of opting people out of pension schemes is not something that I would broadly support. However, the narrow, specific instance that he has raised has been pursued by the Defence Committee. 
 We wrote to that Committee in December 2002, during the consultation period, explaining the difficulties that would be created if the armed forces pension scheme became contributory. The main problem is that that would inevitably lead to higher gross pay, but lower take-home pay. We judged that that would probably be deeply unpopular with our armed forces. I do not deny that the hon. Gentleman has made a reasonable point, but we have looked at it and decided that we should not pursue it.

Gerald Howarth: May I respond to the Minister, since these amendments all stand in my name? He said earlier that we had had a long debate on clause 1, but we still have some way to go.
 It might be convenient for the Committee if I explain that we have tabled some additional amendments that you have been kind enough to select for consideration later, Mr. Griffiths. The purpose is simply to draw out of the Government, on their specific schemes in relation to both pensions and compensation, some of the issues that we shall be able to debate more fully. For example, there is one on full-career pensions—new clause 19. I would not expect to detain the Committee for long on that, because we had a discussion about it on Tuesday of last week, but there are various other amendments that highlight specific aspects of the Government's proposals, which we believe should have greater scrutiny in the Committee. Therefore, it may be that we shall not spend as much time on clause 1 as had previously been envisaged. 
 However, I should like to point out at the outset that when the Minister said this morning that the scheme was consistent with other public sector schemes, he was using a mantra that he had used several times. The point that we have been trying to make on this side of the Committee is that our armed forces are not just another public sector organisation; they are unique—different. It has been the basis of our submissions to 
 the Government, and the basis of the submissions of the Defence Committee, that the unique nature of our armed forces requires unique treatment. Therefore, to say in defence of a particular proposal that it is square with other public sector schemes cuts absolutely no ice with us, and nor will it with the people with whom the Minister should be most concerned, namely the members of our armed forces for whom he has responsibility.

Ivor Caplin: As the hon. Gentleman knows, I was referring specifically to amendment No. 2, which deals with the issue of primary enabling legislation and secondary legislation. That is where the Bill is consistent with other public sector schemes. I was not commenting, as he well knows, on the comparison between the work of our armed forces and that of other public servants. I was merely talking about the process that we go through in order to deliver public service pension policy for our public servants, including members of our armed forces. That is clear in what we have set out—amendment No. 2 would try to take away from that and to create a different situation. In column 28 that was particularly well dealt with by my hon. Friends the Members for Falkirk, West and for Hornchurch (John Cryer), who both raised questions with the hon. Member for Canterbury about this issue and trade unions.

Gerald Howarth: No Conservative Member was impressed by the Minister's argument—that because the Government have almost unfettered rights in other public sector schemes there is no problem in having an unfettered right in this scheme. We have pointed out that there are organised voices that represent the interests of other public servants in the emergency services. Our cardinal point is that there is no other concerted voice to speak up for the armed forces. The Minister is not proposing anything new. Traditionally, the armed forces have depended on the good will of the Government of the day to ensure that they receive favourable treatment. The Government have produced the first armed forces pensions Bill for many years and are proposing a new slate, and we tabled our amendment because we believe that it is time for a review—a view that the Minister knows is supported by the Defence Committee. In that review, consideration should be given to the introduction of an independent element. I shall not go too far down that road at the moment, because it is the subject of a later group of amendments—new clauses 3, 4 and 17.
 The Minister suggested that the scheme was the same as those for other public services in that it had no independent trustees. The armed forces are not another public service, and the Minister has just repeated the error of his ways.

Julian Brazier: My hon. Friend is making a powerful speech. He made the point that the Government of the day should have the interests of the armed forces at heart. I had to leave the Committee for a few minutes, so could my hon. Friend tell me whether the Minister has yet responded to the point about accrual rates for existing servicemen who choose to stay in the existing scheme?

Gerald Howarth: I can tell my hon. Friend that the Minister responded to that point, but not adequately. We are, I hope, going to debate that matter when we discuss the amendments tabled by my hon. Friend, and I do not want to detain the Committee on that point now. We acknowledge that new schedule 3 is inadequately drafted: indeed, we lifted the whole thing from the Government's own document to give us some meat to bite on, as the hon. Member for South-East Cornwall (Mr. Breed) put it. We do, however, believe that some cardinal principles should be enshrined in the Bill, since the Government are laying a brand new law before us to stand on the statute book for goodness knows how long. It is right that the Government should take the opportunity to ensure that specific cardinal points are written into the Bill. We do insist on that, and will seek to divide the Committee on amendment No. 2.
 My hon. Friends the Members for Canterbury, for New Forest, West and for Blaby (Mr. Robathan) have made important contributions to the debate. My hon. Friend the Member for Canterbury pointed out the cost of housing—a material consideration. We welcome the suggestion that the Minister made on Tuesday that the Government hope to propose some measure that might alleviate the difficulty faced by servicemen and women in obtaining accommodation when they leave the service. It particularly affects those serving in the Army—not so much those in the Navy and the Royal Air Force. Can the Minister give us more detail?

Ivor Caplin: I heard what the hon. Member for Canterbury said, and I thought, looking at the group of amendments, that it would be better dealt with under clause 1 stand part.

Gerald Howarth: I am entirely content with that. The Committee looks forward to hearing what the Minister has to say.

Win Griffiths: Order. I shall make a brief statement. I was not here on Tuesday, but I see that over two hours was spent discussing the amendments. That debate is continuing now and we have another three sets of amendments to discuss on the clause, so there is a good chance that the Chair might feel that there is no need for a stand part debate.

Gerald Howarth: I am sure that the Minister would like to sort us out now, and to tell us exactly what he proposes.

Ivor Caplin: I am not sure that this is the right place to deal with it, but I shall be aware of your words, Mr. Griffiths. The trouble is that clause 1 stand part was my best-prepared speech.

Gerald Howarth: In that case, Mr. Griffiths, I hope that you will indulge the Minister, so that the entire Committee may enjoy his best-rehearsed speech.

Shona McIsaac: Perhaps he could post it to us.

Gerald Howarth: The hon. Lady is extremely uncharitable in suggesting that the Minister, in his distinguished role, should not be allowed to have the Floor, but should instead commit to writing his wonderful, emotional and rhetorical speech to which we are now all looking forward with bated breath.

Claire Curtis-Thomas: We could read it in bed.

Gerald Howarth: I am sure that sleeping pills would be better.
 My hon. Friend the Member for New Forest, West made a number of interesting points. I hope that the Minister will clarify my understanding. I think that he said that, to deal with the pension trough that occurred in the 1970s, it is proposed that the best of three years will be taken in determining the final salary upon which the pension is to be based.

Ivor Caplin: Yes.

Gerald Howarth: The Minister is indicating that that is correct. That is extremely welcome. My hon. Friend the Member for New Forest, West made a very good point about the fact that this should be a contributory scheme. The Minister did not deal with that very successfully. Many in the armed forces would welcome the opportunity to contribute, because that would advertise to the public the fact that they pay in to the scheme. They might be thought not to pay in, because it is non-contributory, whereas we know that the technicality is that the Armed Forces Pay Review Body abates their pay by 7 per cent.—that is the current rate—to reflect the fact that they do not otherwise pay into a contributory scheme. My hon. Friend the Member for New Forest, West is right. There would be additional advantages in that, as the scheme is not funded, there is no loss to the Government if people take their pension away and place it elsewhere.
 Specialist pay is increasingly a part of the main body of pay of members of the armed forces. I am sorry that the Minister has rejected that element as being ineligible for pension payment. The more it becomes necessary for the armed forces to pay supplements to attract or retain specific skills, the more the Minister will have to keep that under review. I think of the mobile phone industry's requirement for signallers a couple of years ago; they were in huge demand and the Army had difficulty in retaining those guys. We will certainly hold him to account on that. 
 The hon. Member for South-East Cornwall made some important points, particularly about cost-neutrality. My hon. Friends have also raised the issue and the Defence Committee felt strongly about it, although I shall not go down that route too far because I raised the matter last week. However, on the one hand, the Government wish to advertise their concern for the armed forces by saying that they want to produce a better scheme, while on the other hand they 
 are saying, ''Sorry lads, this is cost-neutral and any improvements in the benefit will have to be paid for elsewhere.''

Desmond Swayne: My hon. Friend may recall that last week I asked about the extent to which Ministers had considered that overall constraint of affordability. There are many things that we would like in the scheme that would breach that principle. Given that, I wanted to know whether Ministers had considered consulting members of the armed forces widely to discover whether they would prefer to secure the extra benefits either through a larger abatement of pay or through a more comprehensive scheme and a better menu of additional, voluntary contributions. Even if the Minister did not answer that in his winding-up speech, it would be an interesting debate.

Gerald Howarth: We are, I hope, going to debate the transitional arrangements under new clause 8, which we have tabled, for which I hope the Minister and his officials are prepared. He will find that precious few members of the armed forces have any idea what the Government propose, let alone how it will affect them individually. However, I shall return to that point later in our proceedings.
 I was talking about the contribution made by the hon. Member for South-East Cornwall, who has now been replaced by the hon. Member for Hereford. The hon. Member for South-East Cornwall talked about cost-neutrality, but the Government gave the game away as late as last December, in their response to the Defence Committee, when they said: 
 ''The decision that no increase in pensions expenditure was justified in recruitment and retention terms means broadly that the MOD's annual pensions cost will remain unchanged''. 
That is the key issue that I wish to emphasise. The Government had taken the view that increasing pensions expenditure was not justified in recruitment or retention terms and that, therefore, giving the armed forces a better deal did not really matter and was a second priority compared with the need to be cost neutral. 
 The hon. Member for Dunfermline, West (Rachel Squire) was right on Second Reading to point out that the Government's consultants had said that the benefits for those who serve for a short time will ''look increasingly less generous''. The scheme does not produce all-round improvements in benefits, as the consultants suggest.

Desmond Swayne: My hon. Friend began on the strong point that the armed forces are different and need to be treated in a unique manner. In one sense, the Bill and the new scheme will, regrettably, continue to ensure that those in the armed forces are unique, in that they will be the only group who will not be able to secure a full two-thirds pension at the end of their careers. That is principally because of the cost of the early departure point.I asked whether the Minister could justify the fact that the members of the scheme have to pay for that, when it is almost wholly the result of the Government's own manpower planning and retention requirements; to draw people through when they are
 approaching their 40th year. As that is largely an Army manning requirement, surely the scheme should pay for it, rather than the beneficiaries.

Win Griffiths: Order. A number of interventions this morning have been in the nature of brief speeches. I would prefer interventions to be brief.

Gerald Howarth: Thank you, Mr. Griffiths. I agree with my hon. Friend and I know that he will have an opportunity on new clause 19 to develop those arguments further.
 The Minister said earlier that the Government could not allow for a full career pension because basically there was no funding for it. My hon. Friend is right that both the immediate pension and the early departure scheme are manning control tools for the Government's benefit. They are not specifically for the benefit of the members; they are principally for the benefit of the employer, in this case the Government.

Ivor Caplin: I promise to be brief, Mr. Griffiths. I must take up with the hon. Gentleman what he says I said. We do not have the benefit of instant Hansard records, but I do not think that the comments that he attributed to me were accurate.

Gerald Howarth: Let us examine the record when it is printed, but I made a careful note; ''Not possible to allow for full career pensions, no funding''. If I have misrepresented the Minister I shall be delighted to stand corrected. There is no point in trading insults in these Committees. I am not trying to do that. I am trying to get at the truth. If the Minister is saying that there are other reasons for not having a full career pension provision, no doubt he will tell us what they are.
 The Minister told us last week that he would provide more details on the early departure scheme, and I am grateful for that. However, although it was dated Friday 6 February, the note arrived only yesterday. As we are to debate the early departure scheme under new clause 9, we shall still have time to go through it. 
 As I accept what the Minister said in relation to amendment No. 1 about the power to modify, I am happy to seek to withdraw that amendment. I am afraid that we must insist on amendment No. 2, because we believe that there are key principles that should be in the Bill, and the Government have not included them. I know that my hon. Friend the Member for New Forest, West wishes to take up the issue raised by amendment No. 3 about providing defined benefits, so I shall not press it to a vote, and we do not believe that new schedule 3 is suitable in its present form. However, I invite my hon. Friends to support me on amendment No. 2 and I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Amendment proposed: No. 2, in 
clause 1, page 1, line 3, after 'schemes', insert 
 'in accordance with the provisions of Schedule [Armed Forces Pension Scheme].'.—[Mr. Gerald Howarth.] 
 Question put, That the amendment be made:—
The Committee divided: Ayes 6, Noes 10.

Gerald Howarth: I beg to move amendment No. 4, in
clause 1, page 1, line 9, after 'establish', insert
'in accordance with the provisions of Schedule [Armed Forces Compensation Scheme].'.

Win Griffiths: With this it will be convenient to discuss the following:
 New clause 16—Report to parliament— 
 'The Secretary of State shall report to Parliament on the operation of any tariff-based compensation schemes not later than five years after the introduction of such a scheme or three years after any amendment to such a scheme.'. 
New clause 23—Time limits— 
 '(1) No time limit shall apply for the submission of claims for compensation, but after seven years of leaving the Armed Forces a claimant will only succeed if he/she can prove beyond reasonable doubt that the condition or disability for which he/she is claiming is due to service in the Armed Forces. 
 (2) Prior to the seven years limit it will be for the Secretary of State for Defence to prove beyond reasonable doubt that the condition or disability is not due to service in the Armed Forces.'. 
New schedule 4—Armed Forces Compensation Scheme Eligibility/Time Limits— 
Introduction 
 1 The Armed Forces Compensation Scheme (AFCS) is a no-fault compensation scheme which will cover death, illnesses or injuries attributable to or significantly aggravated by service where the illness first presented or incident occurred on or after the date of implementation of this scheme. The scheme will provide lump sum payments for pain and suffering based on a graduated system of tariffs and, where appropriate, income to compensate for loss of earnings capacity. For those disablements which arise before the new scheme comes into force or for deaths which are attributable to events predating this scheme, provision will remain under the current War Pension Scheme and Armed Forces Pension Scheme attributable arrangements. 
 2 The determination of claims will be evidence-based and decision will be taken using the modern ''balance of probabilities'' standard of proof, which will apply a double test to compensation cases to ensure that the burden of proof does not unfairly discriminate against service personnel. Under such a system, a claim for compensation would only fail where both: (a) the claimant is unable to prove on the balance of probabilities that a condition is due to service, and (b) the MoD is able to prove on the same standard of proof that the condition is not due to service. The Department is required to support any claim by releasing any relevant information, such as medical records to assist the claimant. 
Eligibility 
 3 The AFCS will cover regular members of the Royal Navy, Royal Marines, Royal Air Force, Army and members of the Reserve Forces as defined in the Reserve Forces Act 1996. 
Negligence
 4 Any payment made under this scheme would not disqualify Service personnel from making civil negligence claims against the Department. However, any such compensation payment would be taken into account in settling any civil negligence claim, on the basis that loss, for example of earnings, should not be compensated for twice. Abatement of awards would be made where appropriate. 
Eligibility Criteria 
 5 The eligibility criteria are intended to provide compensation for disablement or death due to: 
 (1) Incidents which were the direct consequence of a person's duties in the Armed Forces, on from following a legitimate order; 
 (2) Terrorism and warlike activities; 
 (3) Negligence by the MoD as an employer. 
 6 The scheme is not designed to provide compensation for every illness or injury experienced by a member of the Armed Forces during his or her career. It will not cover: 
 (1) Illness which could not be demonstrated on the balance of probabilities to be the result of an individual's duties in the Armed Forces; 
 (2) Injuries arising from incidents not directly related to duties in the Armed Forces; 
 (3) Injury or illness arising from culpable negligence or misconduct on the part of the individual. 
 7 Personnel or their dependants can claim compensation for death, injury or disease in the following situations: 
 (1) Attributable death in service; 
 (2) Attributable injury or illness in service leading to medical discharge; 
 (3) Attributable injury or illness in service not leading to medical discharge; 
 (4) Attributable conditions or death developing after leaving Service but claimed before five years (if not linked to a specific incident); 
 (5) Attributable conditions or death which are recognised to have a late onset (such as some cancers) with no time limit; 
 (6) Conditions having onset before or during Service which are subsequently significantly aggravated by Service. 
Time Limits 
 8 The circumstances giving rise to admissible claims fall into six broad categories: 
 (1) injury or illness arising in service and causing immediate disablement; 
 (2) injury or illness arising before or in service and significantly aggravated by service; 
 (3) death in service; 
 (4) inury or illness in service claimed to be the cause of disablement arising in the longer term; 
 (5) illness which arises after retirement; 
 (6) death in retirement. 
 9 For each category, we have considered eligibility to claim and the period of time within which a claim must be submitted. In the first three categories there is no doubt that individuals, or their survivors, should be eligible for benefits. The position is more difficult for the other three categories, where the objective should be to permit claims for conditions clearly attributable to service but to exclude claims where a causal link is unlikely. 
 10 The qualifying period for claiming for disablement/death for the majority of conditions is as follows: 
 (1) Five-year time limit to claim from the specific incident that caused the injury, or from first medical presentation of the illness; 
 (2) Within five years of service termination where there is no specific incident, but the disorder is due to ongoing repeated activities.
 11 In addition, there should be a time limit of one year after medical diagnosis has been confirmed. This practice is common in insurance-related schemes and social security benefits. An open-ended system would have the disadvantage that where claims were submitted very late, it could be very difficult properly to assess evidence. There will, however, be safeguards to protect the position of a person who was genuinely unable to claim within the year on account of his condition and unable to instruct another person or organisation to act on his or her behalf, or perhaps in some circumstances because his condition had not stabilised. 
Claiming Outside the Time Limit 
 12 While for the majority of conditions it is reasonable to impose a time limit to claim, there are some conditions which medical opinion accepts can have a possible service causal link but, by nature, present clinically only after years or decades. Claims for listed exempt conditions, such as some cancers linked to occupational exposures, asbestos related diseases and some psychiatric illnesses, would be accepted outside the normal time limit. 
 13 The Secretary of State will publish an exceptions list of illnesses based on expert medical advice from the appropriate specialities. The list will retain a degree of flexibility. It will be reviewed annually to take account of medical understanding and additional conditions may be added (and others removed) on the basis of new medical evidence and understanding of causation of the disorder. Eligibility for claims for illnesses subsequently added to the list will include those whose illness relates to service prior to the date of the changes to the exemptions list. 
 Deterioration/Interim Awards and Consequential Disorders 
 Introduction 
 (1) Assessment of disablement and quantification of awards is not a matter of consensus or exact science. While treatment for the disabilities seen in 1917 at the outset of the War Pensions Scheme was limited, with strong risk of increase in disabling effects with time from the injury, modern medical management means that most disabling disorders (particularly the less serious injuries) will now improve quickly to cure or steady state. For the majority of successful claimants, in line with civil awards and the insurance industry, the initial award will be full and final and there will be no routine review mechanism. This also means that once an award is made, if the Service person's (or ex-Service person's) condition improves any Guaranteed Income Stream (GIS) in payment will not be withdrawn or reduced. Awards in the compensation scheme are for service-related disablement only and do not reflect age-related disablement. 
Interim Awards 
 14 There are some situations where, from the outset, it is not possible to predict with confidence the long-term prognosis for an individual. In such cases, an interim award will be made with an agreed interval before a review to assess the condition and either the original award will be confirmed or revised. 
Deterioration 
 15 The tariff levels are designed to take account of expected average degree of deterioration for any given condition based on generally accepted medical understanding. To cater for exceptional circumstances, where deterioration is significantly greater than would be either expected or accounted for in the tariff level, the arrangements will offer re-opening of cases. Evidence of significant material change in the person's condition will be required. 
Consequential Disorders 
 16 The tariff levels take account of the average prognosis of the core disorder including, in the case of some serious traumatic physical injuries, the high likelihood of subsequent osteoarthritis in relevant joints. The provisions of the new scheme consider such disablement as an extension of the original injury. 
 17 Review of the case will be permitted where from the outset the nature of the accepted disablement means that there is a recognised risk that some consequential disorder could develop at some indefinite time in the future, eg head injury followed by traumatic epilepsy. In contradistinction to 2.4 the risk here is possible, not probable. This approach will not be applicable to the 
majority of disorders claimed in the Scheme. The majority of claims in the Scheme will settle completely or to a stable condition within a short time. 
 Lump Sum 
 General 
 18 The Scheme awards lump sum payments as compensation for pain and suffering according to a comprehensive graduated tariff. This delivers consistent awards for the same disability. This lists injuries, mental and physical conditions (in line with their nature and severity) and corresponding monetary award levels. 
 19 The published award levels are informed by medical understanding and the approach of the Judicial Studies Board. Definitions used in the tariff descriptors, adjudication guidance and supporting policy are being developed and will be published. Following scheme implementation, the tariff levels will be reviewed in line with emerging medical knowledge and changed approaches by the Judicial Studies Board. 
 20 Lump sum awards are payable for those able to remain in Service despite an attributable injury. It is likely that such awards will be below tariff level 11 where no GIS is payable. However, while the Service person remains in the Armed Forces, regardless of the type of injury and relevant tariff level, there would normally be no GIS as no compensation for loss of earnings would be required. For further details on GIS see Section 4 below. 
Multiple Disablements 
 21 The scheme will consider multiple disablements arising from the same incident. While the exact details have not yet been finalised, it is likely that up to three conditions might be covered and that the total value of lump sum payment would not exceed tariff level 1. 
Aggravation 
 22 The Scheme will make awards on the basis of significant service aggravation of disorders. Disorders will have had origin pre or during service and must have been aggravated significantly by service with aggravation remaining at service termination. If the disorder is no worse than before service or than it would have been had a person not served, service aggravation does not remain and there is no entitlement. The above will apply for determining GIS awards. The position for lump sum awards where service has aggravated rather than caused the condition is the subject of further detailed work. 
 23 If a condition is aggravated, the award paid will be the percentage of the tariff award (to the nearest centile) which represents Service aggravation. 
 Guaranteed Income Stream (GIS) 
 GIS 
 24 For those attributable injuries or illnesses that are in tariff levels 1 to 11 a Guaranteed Income Stream (GIS) is payable for life as compensation for loss of earnings. The formula used to calculate the GIS is at Annex B. 
 25 The GIS formula is based on the salary in payment at the time of retirement and the remaining years left until the normal pension age (which for the Armed Forces is age 55), plus the period of time for which on average a pension is drawn in retirement. The calculation produces an annual income that is paid for life. The percentage of lost earnings included in the compensation income depends on the severity of disability, as expressed by the tariff. 
 26 The percentages are: 
 (1) Tariffs 1-4: 100 per cent. 
 (2) Tariffs 5, 6: 75 per cent. 
 (3) Tariffs 7, 8: 50 per cent. 
 (4) Tariffs 9-11: 30 per cent. 
 (5) Tariffs 12-15: None
 Once the GIS has been calculated, the income is abated by any AFPS invaliding pension in payment to ensure that the Service person is not compensated twice. 
 27 Where there are multiple injuries, a maximum of 100 per cent. GIS will be paid, but will apply only to conditions where there is a significant multiplier effect on earnings capacity. 
WGIS (Widow(er)s' Guaranteed Income Stream) 
 28 For the first time widows/widowers and substantial registered partners are to be treated equally for compensation purposes. The compensatory income would be derived by calculating the size of the capital sum required to compensate the widow/widower for the financial penalty of the loss of the spouse's earnings. This sum will then be structured to provide a regular income in the form of a Guaranteed Income Stream for Widow(er)s (GISW).The GISW would be payable for life, and would equate to 60 per cent. of the GIS calculation minus 75 per cent. of any non-attributable pension benefits that have been awarded. It would be inappropriate to provide compensation equal to or more than the full value of the spouse's lost earnings because this would clearly exceed a widow(er)'s actual financial loss. It is not possible to assess the true extent of financial loss for widow(er)s, and there is no single formula that will match all circumstances, but we consider that 60 per cent. of the spouse's lost earnings capacity (abated by the widow(er)'s ill-health pension to avoid double counting), should represent a reasonable solution. 
Children's Benefits 
 29 No major changes are proposed to the value of benefits payable to children of those whose death was attributable to service, but the structure will be adjusted to reflect the GIS approach. The benefits are not intended to provide financial support for life, but only until the age when children would normally cease to be financially dependent on their parents. A child's GIS may cease when the child reaches 17. However, it may continue, or be restored, whilst the child is in full-time education. It may also continue, or be restored, whilst the child is in full-time education. It may also continue if it is determined that the child is incapable of earning his or her own living due to mental or bodily infirmity and where the condition was diagnosed before the child reached the age of 17. Decisions will be at the discretion of the scheme administrator. Children's benefits will be awarded as follows: 
 (1) Where there is a widow(er): 
 (a) 12.5 per cent. of the sum for the lost earnings capacity of the deceased (abated by the illhealth pension to avoid double counting) will be made available for each of the first two children, and 7.5 per cent. for each of the next two. If there are more than four children, 40 per cent. of lost earnings will be divided equally. 
 (b) Subject to the provision of abatement above, an only child will also receive 25 per cent. of the ill-health pension. If there are two or more children, 37.5 per cent. of the ill-health pension will be divided equally. 
 (2) Where there is no widow(er): 
 (a) 25 per cent. of the sum for the lost earnings capacity of the deceased (abated by the ill-health pension to avoid double counting) will be made available to each child, up to a maximum of four children. If there are more than four children, 100 per cent. of lost earnings will be divided equally. 
 (b) Subject to the provision on abatement above, an only child will receive 33.33 per cent. of the ill-health pension, two surviving children will share 66.67 per cent. of the ill-health pension, and if there are three or more children, the full ill-health pension will be divided equally. 
Benefits Payable on Attributable Injury or Illness  Armed Forces Non-Attributable Ill-Health Benefits Attributable Compensation Scheme Benefits  Benefits payable if member of new AFPS Benefits payable if member of current AFPS Lump Sum GIS   Remaining in ServiceNoneNoneLump sum payable for pain and suffering (see section 3)No GIS appropriate as there is no loss of earnings (see section 4)   Medically dischargedIll-health award dependent on severity of condition based on three tiers Service Non-Attributable Invaliding Pension Lump sum payable for pain and suffering (see section 3) For injuries at tariff levels 1-11 a GIS will be payable to compensate for loss of earnings (see section 4) but abated by benefits payable under the AFPS and Early Departure Scheme.

Benefits Payable on Attributable Injury or Illness

Benefits Payable on Death  AFPS Non-Attributable Benefits Compensation Scheme Benefits  Benefits payable if member of new AFPS Benefits payable if member of current AFPS Lump Sum GIS   Attributable death in ServiceNon-attributable Widow's Pension based on 2/3 of member's highest tier ill-health pension Death-in-service lump sum of four times pensionable pay Children's pension Benefits payalbe to substantial registered unmarried partners Non-attributable Widow's Pension based on 1/2 of member's ill-health pension Death-in-service lump sum of approx. 1 1/2 times pensionable pay Children's pension Bereavement Grant guarantee for widow(er)s or registered unmarried partners: currently set so that if 3 times pensionable pay plus £20,000 is greater than the AFPS death-in-service lump sum, the compensation scheme will pay the balance Widow(er)'s GIS Children's GIS Benefits payable to registered unmarried partners   Attributable death in retirement Non-attributable Widow's Pension based on 2/3 of the member's pension in receipt at the date of death Children's pension 5 year pension guarantee Benefits payable to registered unmarried partners Non-attributable Widow's Pension based on 1/2 of member's pension in receipt at the date of death Children's pension Bereavement Grant, currently set at £20,000 to widow(er)'s or registered unmarried partners Widow(er)'s GIS Children's GIS Benefits payable to registered unmarried partners

Benefits Payable on Death

Death-in-service lump sum of four times pensionable pay
 Children's pension
 Benefits payalbe to substantial registered unmarried partners
 Death-in-service lump sum of approx. 1 1/2 times pensionable pay
 Children's pension
 Children's GIS
 Benefits payable to registered unmarried partners
 Children's pension
 5 year pension guarantee
 Benefits payable to registered unmarried partners
 Children's pension
 Children's GIS
 Benefits payable to registered unmarried partners
Home to Duty and Physical Development Injuries/Deaths 
 Home to Duty 
 32 Compensation will be provided for limited home-to-duty travel to cover emergency callout (to duty only), travel to/from operations/exercises overseas (in accordance with Joint Service Publications guidelines) and other detached duty travel. 
 33 Exceptionally, if Service Families Accommodation (SFA) is unavailable within 50 miles radius of the workplace then compensation will be provided in the event of an injury or death 
whilst travelling between home and work. Individuals who choose to live more than 50 miles from work in SFA will not be covered under the scheme. 
Physical Development Activities 
 34 Compensation will be provided for injury arising from all publicly funded fitness, sports and adventurous training activities that would qualify as ''on duty'' as laid down in Service Regulations.
 35 Defined fitness activities (regulations as laid down in the Armed Forces Physical Development Policy document) are also eligible for compensation in the event of injury. These must be part of a formal training or fitness programme agreed by the Service authority as necessary to meet Service fitness requirements. 
 36 Injuries incurred in the above activities will generally be admissible for compensation only if they are reported, recorded and subject to medical examination when incurred. This should generally take place within 24 hours of the event. However, the scheme will have discretion to accept attributability where under the specific circumstances the reporting timescale is not practicable or where the injury cannot be attributed to a single incident. This will be subject to the existence of reasonable evidence, including within service medical records, to support the case for attributability. 
 37 Injuries incurred during or in support of sporting commitments undertaken in a professional capacity or for a national team will not qualify for compensation under the new scheme. It is considered reasonable that these will be covered by separate provisions. 
 38 Travel to sports competitions and other activities as classed as ''on-duty'' within the Service regulations will be covered under the Compensation Scheme provided that this travel is publicly funded. 
 39 Injuries incurred in leisure or social activities will not be eligible for compensation under the new arrangements. It will be for individuals themselves to consider whether they need to make arrangements for appropriate cover for such activities. 
 Reservists 
 Eligibility 
 40 All members of the Reserves as defined under the 1996 Reserves Forces Act will be covered under the AFCS. This replaces the benefits they currently receive under the Attributable Benefits for Reservists Scheme (ABRS). As with the current ABRS, this scheme is designed to give Reservists the same attributable benefits as regular Service personnel. However, where a Reservist is in receipt of benefits from elsewhere, such as a personal pension or an occupational pension, benefits under the new Compensation Scheme would be abated. 
Time limits 
 41 This will be the same as for regular Armed Forces personnel. Eligibility for compensation for disorders that develop after service termination will be subject to a time limit of five years, apart from certain listed late-onset conditions, such as some cancers. 
Guaranteed Income Stream 
 42 In many cases, assessing lost earnings for Reservists will not be straightforward, however, as military service will not be their only occupation. The assessment of lost earnings will not be based on a Reservist's pay in his/her civilian occupation as this is not the financial basis on which he/she is employed, would be complex to administer, and would raise issues of equity between reservists. 
 43 Lost earnings will therefore be assessed on the basics of the Reservist's military salary, which is in most cases the salary of a regular counterpart of equal rank. This will ensure consistency of approach with the regular Armed Forces. So that those in a high-earning civilian occupation will not be disadvantaged, full account will be taken of pay supplements that some Reservists earn (to compensate for those whose gross civilian earnings are higher than their gross service pay). 
Physical Development Activities 
 44 Reservists will be covered under broadly the same criteria, but when the detailed scheme rules are being developed due account will be taken of their particular circumstances and specific guidelines will be provided. 
 Disputes and Appeals Process 
 Internal Appeals Process 
 45 Precise details of the appeal procedures are not yet finalised. However, a claimant will have the opportunity to challenge decisions taken by the scheme administrators. This will start with a single or twin stage Internal Dispute Resolution Process (IDRP) which will be followed by the right of appeal to the Pensions 
Appeal Tribunal (PAT), and at second stage to the Social Security Commissioners. Both are ECHR compliant, independent appeals bodies. 
 46 Claimants will be notified of decisions in the Scheme and provided with reasons for decisions. The points on which a claimant can challenge decisions include: 
 (1) decision to award/not to award; 
 (2) level of award; 
 (3) decision not to waive time limits; 
 (4) decisions on application of exceptional review on grounds of deterioration. 
 47 Individuals will have a period of, say [90 days] following the date of the initial decision notification, when they can dispute the decision and apply for review. They will need to provide grounds and present such additional information as they judge appropriate to support their case. There will be some discretion to waive the time limit for internal review where there is good cause, such as claimant being overseas, illness etc. 
Independent Appeals Process 
 48 If the grounds for the appeal are accepted as legitimate, the case will be reviewed and again the outcome notified with reasons. The claimant can then further challenge the review decision within a defined period [30 days], to the independent appeals authority, the Pensions Appeal Tribunal (PAT). 
Pensions Appeal Tribunal 
 49 The PAT is the existing point of appeal from decisions of the current scheme. It is intended the PAT will concurrently hear appeals under both the old and new schemes, until claims under the old scheme have phased out over time. 
 50 The PAT rehears cases in full, considering issues of fact and law. The Tribunal is headed by a legally qualified President, supported by a panel of part-time Legal Chairmen, Medical Members and Service Members. 
Further Appeals: Social Security Commissioners and Court of Appeal/Court of Session 
 51 Under the new scheme decisions of the PAT may be appealed on a point of law to the Social Security Commissioners. This is a change to the present situation, where the High Court is currently the first point of appeal from PAT. Changing the path of appeal will bring the appeal route into line with modern tribunals policy and provide better customer service for appellants. 
 52 The Commissioners currently hear appeals from a wide range of tribunals. They are experienced judges, well qualified to judge on difficult points of law, and provide a low-cost, user-friendly forum that is far more accessible than the High Court. 
 53 It is intended Commissioners with appropriate experience in armed force pension matters be assigned to these appeals. It is also intended they be named ''Pensions Appeal Commissioners'' during the hearing, to signify the special status given to veterans' issues. 
 54 Decisions of the Social Security Commissioners may in turn be appealed to the Court of Appeal (or the Court of Session in Scotland) on a point of law. In some cases it may be appropriate for particularly difficult points of law to have final resolution in a Court. 
 General Administration 
 Administration of the Scheme 
 55 Administrative arrangements are not yet developed in detail, however some key points have been established as follows: 
 (1) A claim will be considered automatically where there is a medical discharge from service or a death in service. 
 (2) Decisions in the scheme will be evidence-based, dependent on case-specific facts, the standard of proof and in line with contemporary medical understanding of causes of the disorders. 
 (3) Guidance and instructions for decison-makers, and policy underpinning the Scheme will be published and regularly reviewed. 
 (4) There will be a statutory internal dispute resolution procedure followed by a right of appeal to the PAT which provides an independent ECHR-compliant appeals procedure.
 56 The details will be developed by a working group, with tri-Service representation and input from agencies such as the Veterans' Agency and the Armed Forces Pay and Administration Agency. Interested veterans organisations will also be consulted. 
 57 The administrative process will be subject to the usual government financial controls and arrangements will need to ensure the integrity of the scheme and make it fraud resistant. Comprehensive management information will be required and the administrators and medical advisers will be provided with adequate training, published guidance and supervision. Suitable quality assurance processes will be included. The details of these processes are still to be developed. 
Adjudication of Claims and the Role of the Doctor 
 58 Decisions will not be medically certified but made by administrators with access to medical advice. Designed on the tariff system and with the time limits for claiming, it has been the aim to make the new scheme's decisions relatively simple and to reduce to a minimum the scope for discretion. 
 59 To ensure high quality decsions medical input is needed in the new scheme. Three main areas are as follows: 
 (1) scheme design (including review and updating of tariff and exceptions list); 
 (2) provision of medical evidence; 
 (3) provision of medical advice to the decision-maker where required. 
 60 Service medical evidence is key to the new arrangements and emphasis will be on the importance of detailed, accurate service records fully documenting incidents, events and health information. This will be supported by the work done since the 1991 Gulf crisis to improve the medical records of Service personnel including the introduction of the Operation Medical Record (FMed 965). In the longer term it is proposed to link electronic and paper records for both peace-time and operations. The system will be compatible with NHS systems and in line with the Government information strategy on electronic medical records. The Compensation Scheme will be introduced at a time when there have been significant improvements in the management of medical records. The resultant Service medical records will allow administrative staff broadly to establish the presence and nature of disablement and eligibility. Analysis of in service data and war pensions claims confirms that the majority of claims will be for musculoskeletal injuries and conditions which are well suited to a tariff approach. 
 61 More complex claims will benefit from easily accessible medical advice for administrative decision-makers. Particular issues may be: 
 (1) Where the claimed disablement does not quite fit the tariff; 
 (2) There is no clearly appropriate tariff level; 
 (3) Whether cases falling outside the 5 year time limit for submitting claims should be accepted for consideration on the basis that they should fall within the ''excepted'' list; 
 (4) Medical disorders where there is no consensus understanding, eg psychological injury. 
 62 Where necessary and, as now, with permission, post-service evidence from the claimant's clinicians or by examination will be obtained. Advice to adjudicators will be provided by trained dedicated doctors who have knowledge of the Scheme, law and policy as well as a background in disability analysis or occupational health. 
Welfare 
 63 The War Pensioners Welfare Service (WPWS) will remain for those who are already in receipt of a War Pension. With a different client base and setting, we will consider the particular nature of the support required for the new compensation scheme, avoiding duplication of existing related services. Support around service termination will be paramount. Long term follow-up is likely to be appropriate only for the most seriously disabled. The Veterans Agency will play an important role in advising on the development of proposals for a support mechanism and we will consult as appropriate with ex-Service organisations.
Provision of Medical Treatment for Disablement Leading to Medical Discharge 
 64 As with the present provisions, the assumption is that in-service care will be provided by the Defence Medical Service, while post-service responsibility for service-related disablements will fall to the NHS. We will be consulting with the Department of Health about the continuance of current arrangements for priority NHS medical treatment for compensated conditions. 
Transition 
 65 Although claims for injuries through the new Compensation Scheme will be made for injuries and illnesses whose cause occurs after the date of implementation, we recognise there may be less clear cut cases and will be developing mechanisms to ensure that no claims will fall between the gaps of the new and old schemes.'.

Gerald Howarth: New schedule 4 effectively replicates the Government's own framework document proposals for the compensation scheme and will be subject to the same defects that the Minister drew to our attention earlier in respect of new schedule 3. Nevertheless, the same principles apply. We believe that the cardinal points of the compensation arrangements should be included in the Bill. There are a number of issues that relate to compensation and, for the benefit of the Committee, I have proposed some new clauses that might enable us to deal with those issues more specifically, as opposed to in a general wrap-up. For example, new clauses 14 and 15 deal with a duty of care over medical records, which I would like to come on to later. New clauses 24 and 25 also pertain to the compensation arrangements, but we can deal with those later as well.
 However, there are a number of other general issues that are of concern. There are two major issues, in particular. One is the change that the Government propose in relation to the burden of proof for compensation claims; the second is the reduction in the time available to those who wish to claim under the scheme. Currently, there is no time limit. The Government, in their first stab at drawing up new pension and compensation provisions, proposed that there should be a time limit of three years. That caused consternation, particularly in the Royal British Legion. The Government then relented somewhat and proposed that the time limit should be increased to five years. I will come on to the time limit later. 
 The Defence Committee was particularly scathing about the burden of proof issue in its report. Currently, the compensation scheme operates a policy of reasonable doubt. That means that unless the Ministry of Defence can prove beyond reasonable doubt that an injury or illness was not caused as a result of time in service, a claimant can receive a war pension. The new proposal for balance of probabilities means that compensation may be denied if officials can infer that, on the balance of probabilities, an injury or illness is not service-related. The claimant would have to prove that it was service-related. 
 The change from the current proof of evidence—reasonable doubt—to the balance of probabilities, combined with a five-year time limit for claiming after April 2005 is key. As the Minister has acknowledged, although the pension arrangements will apply only to those who join after April 2005—or later, if our amendment is agreed—and to those currently serving 
 who elect to join the new scheme, compensation arrangements will apply to those serving today. That will be mandatory.

Ivor Caplin: I hope to help on this important issue. We are talking about instances that occur after the commencement of the legislation on 6 April 2005 in relation to compensation. Yes, it will apply to those serving today, but only in relation to an incident that occurred after the effective date of the legislation.

Gerald Howarth: That is a helpful clarification. The Minister is saying that those who claim for any injuries sustained up to April 2005 will be claiming under the current arrangements. That is at least a step in the right direction, and I am sure it will be welcomed.

Ivor Caplin: Before the hon. Gentleman runs away with the idea that I am somehow making policy on the hoof, I have been consistent about this point since I first launched the scheme last September, so I am very clear that that is the case.

Gerald Howarth: I am sure that we are all grateful to the Minister. The Royal British Legion, which has been in the van of expressing concern about the matter, contends that the changes proposed by the Government will reduce the number of successful claims. I want to make it clear from the outset that, like many colleagues, I have grave concerns about the compensation culture gathering pace in our country. I listen to Classic FM, and if I hear that firm touting for business in one of its adverts—I am not going to mention its name—

Andrew Robathan: Go on.

Gerald Howarth: My hon. Friends are not going to tempt me, but I will write them a note saying, ''Do not give any business to this outfit.'' It is grotesque how such ambulance-chasing exercises go on. When we are talking about members of the armed forces, different issues apply from those applying to cases of people tripping up on paving stones in the town.
 The legion's view that there is likely to be a reduced number of successful claims is a reflection not of its view that claims are a good thing, but of a concern that people who have genuinely been injured as a result of their military service will not be able to claim. It illustrates the point by saying that it processed 5,000 new claims between 2002 and 2003. It estimates that using the proposed criterion of the balance of probabilities together with the proposed five-year time limit, up to 60 per cent. of those claims would have failed on those restrictions alone. It believes that that factor, together with the new arrangements that require allowances to be claimed through the Department for Work and Pensions, will have a severely negative affect on the level of compensation currently provided for under the war pension scheme. 
 The Ministry of Defence's claim that continuance of the reasonable doubt criterion would be unaffordable looks less than convincing bearing in mind the fact that the majority of applications for war disablement 
 pensions for at least the next five years will be under the current rules, as the Minister has just told us. With the reduction in the size of the armed forces over the past 40 years, coupled with the adoption of the proposed new scheme criteria, the number of cases arising from service post-2005 will be much smaller. That is more or less a conclusive fact. 
 To introduce a burden of proof based on the balance of probabilities is likely to be very divisive, as the majority of acceptable claims will be from the pre-2005 ex-service population under the rules for the war pension scheme, with the conditions post-2005 being far more restrictive. The Government have got off on the wrong foot. 
 I was interested to see on the news last night—and the Minister will tell me if I have got this wrong—that the Home Secretary, in one of the many off-the-cuff announcements that he is prone to making, suggested that in order to get more criminals convicted we ought to change the criterion from the balance of probabilities to beyond reasonable doubt''—I may have got that the wrong way round. The Home Secretary wants to make it easier to catch criminals, while the Ministry of Defence wants to make it more difficult for people to claim compensation for ailments that they have suffered as a result of military service. This is not the right way to proceed. 
 I remind the Minister that the Defence Committee was very strongly opposed to this measure. It sided with the Royal British Legion, which claimed that it was a cost-saving exercise. The Royal British Legion cited also the fact that the Government's aim is to bring the compensation scheme in line with civil law and common practice so that it reflects modern practice. The Prime Minister and Ministers beneath him never cease to seize the opportunity to praise the armed forces and yet, at a time when they are trying to impress upon us all the unique contribution made by the forces, here we have a measure that must inevitably be less favourable than the existing scheme, being introduced in order to comply with common practice.

Ivor Caplin: I wonder whether the hon. Gentleman could clarify for me whether he is giving his 100 per cent. backing to the Royal British Legion's case for the status quo, or his 100 per cent. backing to paragraph 70 of the Defence Committee's report on compensation.

Gerald Howarth: I shall turn to paragraph 70 to ensure that the Minister is not leading me into a trap. I hope that you will allow me to do so, Mr. Griffiths, so that the Committee might be better informed. What the Royal British Legion is proposing is that there should be no change, and the status quo should prevail: the balance of probabilities and no time limit. I was going to come on to this point, but since the Minister raises it, I am happy to oblige now.
 The Defence Committee proposed that, as a compromise, there should be a double test. It was a way of helping the Government. If I may, I shall tell the Committee what the relevant paragraph says:
 ''The issue is as much about the burden of proof as the standard of proof. Personnel might be discouraged from making compensation claims by the hurdle of having to present their own case. There are also concerns, which we discuss below, about the records on which they would have to base this case. If the Government continues to insist on applying a 'balance of probabilities' standard of proof,''— 
here is the recommendation— 
a possible solution might be to apply a double test to compensation cases to ensure that the burden of proof does not unfairly discriminate against service personnel. Under such a system, a claim for compensation would only fail where both: (a) the claimant is unable to prove on the balance of probabilities that a condition is due to service, and (b) the MOD is able to prove on the same standard of proof that the condition is not due to service. We have not assessed how the proposal will be implemented, but believe that the MOD should seriously consider it in the light of the special circumstances of Armed Forces personnel.'' 
To assist the Committee, I incorporated the Select Committee's recommended double test in new schedule 4, which therefore differs from the Government's framework document. Paragraph 2 of new schedule 4 states: 
 ''The determination of claims will be evidence-based and decision will be taken using the modern 'balance of probabilities' standard of proof, which will apply a double test''. 
I shall develop the argument a little more. We have offered the Government two goes. One leaves us with the status quo; if they insist on maintaining the balance of probabilities, in the interests of being constructive, we are prepared to consider a double test. I am happy to give way if the Minister wants to intervene.

Ivor Caplin: I am sure that my hon. Friends and I are equally confused. One cannot support both the British Legion and the Select Committee. In effect, the Select Committee chose not to accept the representations of the British Legion. My question is simple: are the Opposition sitting on the fence, or will they come off the fence and say whether they support the Select Committee's view or that of the British Legion?

Gerald Howarth: I am happy to put it on the line that we support the Royal British Legion. The Government have tabled nothing debatable—the Minister will have to put up with my repeatedly saying so. We tabled the new schedule out of the goodness of our hearts and in a spirit of good will and comradeship—[Interruption.] If you believe that, you'll believe anything.
 I do not want to be completely dogmatic about it, but I can see one or two reasonable Labour Members—I shall not embarrass them by naming them. The Defence Committee came up with a compromise proposal. The Committee was dominated by Labour Members, and they may not be prepared fully to support the Royal British Legion, but they may find in our proposals a neat compromise—one that does not embarrass the Minister but will enable them, at least in part, to side with the Royal British Legion.

Ivor Caplin: All my hon. Friends are good people. If I understand the last few minutes of our debate, the hon. Gentleman is speaking to a proposal that he does
 not support; rather, he supports the British Legion's view. Why did he not table something else, rather than adopting the Select Committee's recommendation?

Desmond Swayne: Perhaps it is a probing amendment.

Gerald Howarth: As I say, the Minister has given us nothing to debate, so we tabled something. As my hon. Friend said, we tabled it as a probing amendment. Unusually, it gives the Government a real and reasonable choice. They can either support the Royal British Legion—intrinsically, that is the right thing to do—or, if they find that difficult, they have the Defence Committee behind them.

Paul Keetch: I see nothing unusual in the hon. Gentleman's position. He is right to offer an alternative between the viewpoints of the Royal British Legion and the Defence Committee. Is it not the case that one of the reasons why we have to be over-generous to our armed forces in terms of compensation is that it is not just in their work that they put themselves in danger, but in their training, and in the pursuits that they enjoy as part of the armed forces. That is why they deserve to have special treatment, and that is why either the status quo, as suggested by the Royal British Legion, or the suggestion of the Defence Committee, seem to me to be a perfectly sensible approach to take, as opposed to the rather more conservative—if one may use that expression—suggestion of the Government.

Gerald Howarth: Absolutely. I am grateful to the hon. Member for Hereford for his support, which demonstrates a degree of cross-party support on this issue, on which I think the Government are in a spot of bother. They will attract the hostility of the Royal British Legion, as we are discussing what the Royal British Legion stands for and what the people for whom it speaks stand for. I dare say that there are Labour Members who enjoy going along to their Royal British Legion branches, particularly on Remembrance Sunday. I say to those hon. Members that, if they do not accept the amendment, they will have to face the people in those branches and explain to them why they were not prepared to accept even a reasonable compromise. That is a matter between those hon. Members and their consciences.
 As the hon. Member for Hereford rightly pointed out, the reason why the armed forces are different is because they need to be different. One does not join Marks and Sparks as a trainee manager or as a shop floor assistant to put one's life in harm's way. One joins Her Majesty's armed forces with the express understanding that one puts one's life in harm's way. There is probably no time in our recent history when it has been more obvious that, by joining up, one faces the prospect of deployment to a conflict zone. Again, the point is made by the Defence Committee itself: 
 ''The essential difference between the armed services and almost all other employment is that Armed Forces personnel can be asked to put themselves in harm's way, indeed to die for their country. This makes compensation for injury a rather different issue for the Armed Forces than for civilians.''
It is desperately important that we recognise the difference between members of our armed forces and those in other walks of life. Again, as the hon. Gentleman implied, if one is to be deployed to somewhere such as the Gulf—the Minister has been out there, or rather he has not been out there, but his colleagues have been—

Ivor Caplin: Soon.

Gerald Howarth: The hon. Member for Portsmouth, North (Syd Rapson) and I were in Iraq last July, as was the hon. Member for Hereford. If one is to cope with those conditions, one must be fit not only to fight, but to cope with the very different climate. Members of the armed forces are therefore required to maintain fitness. Again, that is not the case for us. We are not required to play football, although judging by the way Brighton and Hove Albion are going, perhaps they will enlist the Minister to join their team and sharpen it up a bit, even though he will have to be a bit fitter before he does so. None the less, there is a strong culture in the armed forces of playing sport. If one plays sport, and particularly contact sport, the risk of injury increases.

Paul Keetch: I do not want to comment on Brighton and Hove Albion; they relegated Hereford from the league two days after the Minister and I were elected.
 It is not only in executing the final element of their work that members of the armed forces face danger. They face great danger even in their training. Would the hon. Gentleman care to recall the number of armed forces personnel who are injured and sometimes even tragically killed in training operations? From day one of their service, even before they go into battle, they are in a different situation from that of any other members of society.

Gerald Howarth: They are in such a situation, and we are all familiar with cases in which accidents have occurred as a consequence of training. One of the two major Royal Engineers depots is situated in my constituency at Gibraltar barracks, and I have seen people handling huge iron girders and massive machinery for building bridges and other engineering operations. One can easily see the risk of injury that they run.
 Of course, the armed forces have to be exposed to risk. I am not going to speak too much about health and safety, but I must point out that if our armed forces are going to do what they did in Iraq, they must be fit and they must take calculated risks. The Minister will know that such concerns are being expressed at the highest level in our armed forces. If there is no willingness to have people take calculated risks, we will not have armed forces that are as professional, competent and—dare I say it—as brilliant as those that we have today. We therefore have to train people to take risks. It sounds bizarre, but that is what we are doing. If we train people to take risks, it is more likely that they will be put in harm's way. The hon. Member for Hereford is therefore absolutely right. When it 
 comes to training, there is every prospect that the injury rate will be much greater than in any other walk of life. 
 That comprehensively deals with the question of the burden of proof. I think that the Government are wrong about that. I am sorry that they will not listen to the argument, but I have no doubt that, in principle, the Royal British Legion is right and that the burden of proof should remain as it is. It is up to the Ministry of Defence to make a case. Someone who has given a commitment to our country and sustained injury as a consequence should have the support of their former employer to ensure that they are adequately compensated for their injury. I do not believe that we should have our armed forces on the cheap. 
 The new schedule 4 compensation provisions raise other issues to which I also wish to refer. One of them is the tariff. Paragraph 81 on page 27 of the excellent Defence Committee report states: 
''a system of assigning tariffs to injuries, while it may be a useful guide, cannot be fair if it is applied mechanistically. Employment in the Armed Forces covers a wide range of occupational groups and the impact of any one type of disablement on civilian employment prospects will vary widely from one individual to another.'' 
The Government are proposing that there should be a series of tariffs so that an injury falling into one of 12 categories should attract compensation consistent with its tariff level. We are told that the Government have not yet finalised the tariffs—I do not know—but again they are wrong in any case. Why apply a mechanistic yardstick to medical injuries, where an injury to one person may affect their employment prospects much more than an injury to another person? 
 On Second Reading, I gave the example of a squaddie who has an eye injury. Of course, such an injury will be serious and it may impair someone's ability to do a civilian job, but if one is a pilot and one suffers an eye injury, one's flying days are gone. Therefore, one's prospects of being able to command a job in the civilian marketplace commensurate with one's skill will be severely reduced. Will the Minister give us some idea of how the scheme is going to work? Our view is that it is arbitrary and that it will cause serious problems in terms of people feeling very disaffected. Neither will people have recourse to the sort of appeal that now arises, because the appeal tribunal will have to look at the tariff levels in terms just as mechanistic as those in which the Government have set them out. 
 Although the scheme will not come into effect for a long time, the Minister is at risk of introducing an arrangement that will cause his successor, whoever they are—I make no boast about that—to have to deal with a deluge of grievances. They will come from people who feel they have not been properly compensated for the injury that they have sustained, simply because that injury does not fit into a particular category set out by the Government.

Ivor Caplin: This has been a very interesting debate. I want to be helpful on the important issue of tariffs. I think that the hon. Gentleman was present in the
 Select Committee when we went through the 15 levels of tariff that are currently in a draft form. It is right that they are in a draft form at the moment, because with the start date of the scheme 15 months away, they will have to be changed. That is clear because of medical changes. We are committed to ensuring that the definitions of the tariff, the appropriate guidance and the policy will be evidence based and that they will be published, so that everyone will be clear about what the tariffs mean.

Gerald Howarth: I am grateful to the Minister for that clarification. It takes us back to one of the problems of this Bill generally—we are at the Committee stage and still waiting for clarification on something that is central to the Government's new proposals. Obviously we welcome the fact that he is still prepared to have an open mind about it. He knows that this debate has been going on since 1998 and I shall say publicly what I have said to him privately: that he has taken a grip on a review process that was running on interminably. It has taken longer to sort out the armed forces' pension and compensation arrangements than it took to defeat the Germans in the second world war. He deserves some plaudit for that modest achievement. Nevertheless, we should not be at this stage, and he will see that new clause 16 offers him a good opportunity to carry forward what he is doing now and say that he will review the situation. That is in advance of the scheme coming into operation. He is finessing it now, and we would like him to say that he recognises that there are probably unforeseen implications.
 We have not specified the means by which the Secretary of State should report to Parliament as an act of good faith, because the scheme is complicated enough. The Government cannot foresee all its repercussions, so they should report to Parliament five years after it comes into operation to explain how it has worked. That seems to be an eminently reasonable suggestion that Government Members could support with no trouble. 
 The tariff-based scheme is not in its final form, but I hope that the Minister will convey the details to their Lordships when he has come to a firmer conclusion, because I am sure that they will want to know. The current position is not satisfactory the moment and I have suggested a simple way in which he can at least show good faith by saying that he will keep the matter under review. 
 I have set out other issues to which we will refer later. I have given my preliminary thoughts on the compensation scheme. There are three clear issues that the Government need to reconsider: the burden of proof, time limits—new clause 23 covers that—and the tariff system. We shall refer to other issues later.

Paul Keetch: I want to be specific about what the hon. Member for Aldershot set out so clearly, and refer to the Select Committee's findings about how injuries may affect members of the armed forces differently. I want to speak specifically about my constituency.
 Hon. Members will be aware that the SAS is based just outside the city of Hereford. It is an organisation about which we rightly talk little but to which we all pay tribute from time to time. Something that is different about our special forces, whether from the three armed forces, the Parachute Regiment or the Royal Marines and so on, is that many of those who serve in those forces continue to be involved in military activities when they leave the service of the Crown. There are probably more private military companies based in Hereford than in almost any other place in the world.
 As those people go through their military service and receive the very special and detailed training that makes them such an effective fighting force, which this country frequently uses. They plan their working lives so that once they leave the armed forces they work as specialist military advisers, in specialist forces of friendly Governments or in other capacities. We may have our concerns about some of the things that they go on to do, but they would be severely disadvantaged if they found themselves unable to pursue a career, which to them is very normal, because of injury. 
 By the very fact that such forces are used much more than any other part of Her Majesty's armed forces and placed in much higher danger, they are more susceptible to injury. I have constituents who have been injured in recent campaigns, and their ability to work in environments that their colleagues have moved into has been seriously diminished. 
 I am glad to hear the Minister say that the different tariffs have yet to be decided, but once they have been decided it is not unreasonable for the Government of the day to report on their progress to Parliament and for them to take into account the very real difficulties that members of our armed forces have faced. If he were to do that, he would be sending a special message to those members of the armed forces of whom we expect more, and who themselves expect to do more once they leave the service of the Crown.

Julian Brazier: On a point of order, Mr. Griffiths. One set of compensation issues affects reservists. My hon. Friend the Member for Aldershot has tabled an amendment dealing with reserve forces pensions. Were I to table an amendment dealing with reservist compensation, could we debate it when we debate that amendment? The reservist subject is already immensely complex and matters are best taken together rather than by adding an extra complication to the compensation debate.

Win Griffiths: It will partly depend on the terms of your amendment. No doubt you will be able to consult with the appropriate people to get something in order that can be added to the existing list of amendments.

Julian Brazier: I am most grateful to you, Mr. Griffiths. In that case, I will confine myself to regular forces now.
 I have a family interest in the matter. Neither my father nor my grandfather drew a war pension, but my grandfather's death from pernicious anaemia was undoubtedly brought on by the tropical illness he caught fighting in Mesopotamia in the first world war. 
 It did not stop him fighting all the way through the second world war and being decorated again, but he died rather soon afterwards. 
 My father was injured defusing a terrorist device in Palestine. To the enormous surprise of the doctors, he made a full recovery, so he did not draw a war pension. Although he never drew a war pension because of immediate injuries, he has now qualified for one as a result of the onset of deafness years after he left the Army. It is a condition from which members of the Royal Engineers, and in particular those who worked on bomb disposal duties, commonly suffer. None of the provisions will affect existing war pensions, so it is not an interest that I have to declare. 
 Under the rather curious structuring of the Bill, we will discuss the application of the tribunals later, so I do not want to enter that territory now. However, it is important to remember, by way of background to the current discussion, that the process even to pursue claims will be two-tier, much longer and more complicated even before we consider the standard and the burden of proof among other matters. We need to discuss a whole range of points in relation to the new schedule, in which we have had to use the Government's words in order to have a debate about issues such as standard of proof, burden of proof, cut-off on time limits, and record keeping. 
 The Canterbury area has a high recruitment rate, so from time to time I have to deal with issues that affect war pensioners. I will tell the Committee about two cases that illustrate how difficult it is to get a war pension, even now, despite being a deserving case. First: the case of Major Allen, MC, who fought for his country as a Gurkha officer in Burma. He was so severely wounded that the doctors wanted to send him back to base camp, but he insisted on staying in the field hospital because he was frightened that he would be medically downgraded and would not be allowed to rejoin his unit. He went on fighting through the rest of the war, having had a large chunk of his insides removed. After the surgeons in Canterbury were able to show that his medical conditions related to the wounds that he received in the second world war, and after years of campaigning, we eventually got him a derisory, one-off payment of about £3,000. That case does not suggest to me that the burden of proof should be lowered. 
 Secondly, I refer the Committee to the case of Sergeant-Major Kerr, who was awarded the Queen's Gallantry Medal. With the help of the Soldiers, Sailors and Airmens Families Association, he has been pursuing a case for combat stress. I will not share the details of his case because, unlike in Major Allen's case, I have not had permission to make those public—although, from the volume of correspondence, I suspect that he would welcome my doing so. The extent to which we have gone round in circles, with caseworkers from SSAFA supporting the huge amount of medical testimony from consultant psychiatrists, suggests that this country does not make it easy for servicemen who have suffered for their country in uniform to make such claims. 
 The Minister knows that I have the highest personal regard for him, and that I am not making a personal attack on him, but he must realise that there can be no clearer indication of the value that the Government place on members of our armed forces than the way in which they treat those who are disabled or wounded in the course of their service. This panoply of measures, which makes it more difficult for them to make claims, is a sad reflection of that.

Ivor Caplin: I wonder whether the hon. Gentleman will consider the overall compensation package. Will he accept, as the Select Committee does, that it is better because it focuses on those who are most disabled when they are injured?

Julian Brazier: The Minister must have read the Select Committee's report. It does say:
 ''We welcome the fact that some of the safeguards within the compensation scheme have been strengthened''— 
such as raising the time limit from three years to five—but it goes on to say: 
 ''But our essential concerns about the structure of the compensation scheme have not been addressed.''

Ivor Caplin: I was referring to paragraph 73 of the report, which states that the Committee welcomes the focus of the compensation scheme on the severely disabled, and welcomes the new lump-sum payments for pain and suffering. It states:
 ''We welcome these basic aims, which seem both sensible and just.''

Julian Brazier: The Minister refers to one part of the report, which comes after several other parts in which the Select Committee criticises the scheme. The very next sentence after the one that he just quoted states:
 ''In practice, however, the way in which payments will be determined risks being unhelpfully mechanistic.'' 
The Minister was present in the Chamber when the hon. Member for Dunfermline, West (Rachel Squire), who was deputising for the Chairman, made a most courageous speech making it clear that the Committee was very unhappy with the overall balance of the compensation payment.

Gerald Howarth: Further to assist my hon. Friend, I also draw his attention and that of the Minister to paragraph 65, which states that
''our essential concerns about the structure of the compensation scheme have not been addressed.''

Julian Brazier: Absolutely.
 The masterly report from the Defence Committee goes into a lot of detail, on much of which my hon. Friend has already spoken eloquently, about the defects in the proposals. I want to shine the spotlight in one or two slightly different corners. When the veterans' agencies, led by the British Legion, fought the campaign to form a Veterans Agency, they were clear that that agency should be in the Department for Work and Pensions, where the existing provisions for war pensions stood. 
 I took part in two visits to Washington when I served on the Defence Committee and the one message that came over clearly was that the body that co-ordinates activities for war pensioners—veterans, as they call them over there—must be at arm's length from the Government body dealing with the existing armed forces, which has the existing medical records and so on. They would never have brought out all the information that they did on Gulf war syndrome without the Americans—all the running was done over there and we ended up belatedly copying them, and I am talking about a time when my own Government were in power. The running was made over there because the veterans' agency in America was firmly at arm's length from the Pentagon. The Select Committee has rightly drawn attention to issues of record keeping, particularly medical record keeping, although other important details such as the fact that somebody was involved in cleaning up after a tank battle might be extremely relevant to a claim involving cancer because of the issue of depleted uranium. 
 Under the existing system, even before we move on to the new proposals, the decision by the Government to focus all activity relating to veterans in the Ministry of Defence has left that body extraordinarily powerful. The individual claimant who wants to make a war claim, the Major Allen or John Kerr of the future, and tries to do so under the new rules is already handicapped by the fact that he is dealing with an employer who controls all his medical and military records, while the body that he goes to in the first instance, the Veterans Agency, answers to that same organisation, the Ministry of Defence. 
 Now let us consider the proposal not just to raise the standard of proof, but to move the burden of proof on to the individual. The British Legion already spends £500,000 assisting people with fighting tribunals. SSAFA also assists people: we will come back to that after the break when the Minister from the Lord Chancellor's Department is available. Against that background, the idea that we should make it harder and that there should be an even more difficult standard of proof, with the already heavy burden placed even more squarely on the individual, seems more unfair. 
 The Minister said earlier that I ought to look at the Defence Committee's report, and pointed to a rather selective passage in it. Let me point him to the MOD's response to the report on the point of burden of proof. The Defence Committee suggested a plan B, a sort of double lock situation that was a compromise between the existing system and the way in which the Government wanted to move. I do not think there is any case for moving at all, and I suspect that the Select Committee does not either. However, that would at least have offered a fall-back position. The Government's reply is as follows: 
 ''The Government considers it is reasonable to adopt the balance of probabilities standard of proof, which is in line with the practice of other occupational pension schemes and the civil 
courts. This approach was considered as part of the review of the scheme commissioned by the MOD from independent consultants''—
 have they ever worn uniform; have they ever been shot at? I do not know— 
''who confirmed that 'the proposed standard of proof is reasonable'. We accept and understand that the new scheme places the primary onus on the individual claimant and consider this reasonable given that we have no visibility of events in the individual's personal sphere or second career''. 
Words fail me!

John Robertson: Not that I had noticed.

Julian Brazier: The hon. Gentleman has visited members of the armed forces in the Gulf. I know that he is engaged on this kind of issue and he made an excellent speech on Second Reading. I hope that he will not feel constrained in saying something about this issue in the Committee.
 Therefore, according to some independent, presumably civilian, consultants, it is perfectly reasonable to apply the same standard of proof as for an occupational pension scheme for civilians. As my hon. Friend the Member for Aldershot said, the armed forces are very different: they are subject to dangers and risks that are not faced by those in most occupational pension schemes. However, they are also—this is the heart of the injustice—dealing with an employer who holds all the cards, as the Select Committee pointed out. 
 All of us in our constituency surgeries have dealt with civilian cases where people have been involved in fights with their employers over medical conditions. I had a particularly serious case involving a worker who had cut himself badly on glass in his employer's factory. However, the doctors who were advising him and who held all his medical records were those at his own GP practice. There was no question of his having to go back to a military doctor employed by the same organisation as the one processing the claim. 
 The Government are raising the bar for the standard of proof to the same level as would apply in a civilian occupation, while making it harder and more expensive for the individual to pursue the claim through the various tribunals that we shall discuss shortly. At the same time, they have centralised it all under the same organisation—the Ministry of Defence. It has to be an injustice.

Gerald Howarth: May I draw to my hon. Friend's attention what happens in the United States? The Department of Veterans Affairs there is absolutely, totally and completely focused on and committed to the welfare of ex-service personnel, and its officials look after the people in their care with what can almost be described as zeal. There is no national health service in the United States, so there is a greater onus on the employer. The Ministry of Defence appear to be holding back and trying to resist claims, whereas the United States regards ex-servicemen as heroes and will do whatever it can to help them.

Julian Brazier: That is absolutely right.

Ivor Caplin: Nonsense.

Julian Brazier: The Minister says from a sedentary position that it is nonsense; why then is he making these changes? Nobody can pretend that any of them will make it easier for members of the armed forces to go through the process: there is a two-tier tribunal, which we shall discuss another time; the burden of proof has been placed on the individual; the standard of proof has been raised; and the whole process, apart from the appeals process, is now under the main employer, the Ministry of Defence. Perhaps the Minister wants to respond on that point. He has changed his mind, and I am not surprised.
 On Second Reading, my hon. Friend the Member for Mid-Sussex (Mr. Soames) quoted George Washington, who said that the test of the moral worth of a society is the way it treats its war veterans. Funnily enough, my hon. Friend did not give the context for the quotation. The context was interesting, because Washington was talking principally about the huge number of Frenchmen who had gone over to fight for the Americans, so he was not even appealing to a constituency in his own country. He was saying that there was a debt of honour to the people of France, who lived on the other side of the Atlantic—a month's travel away—because they had been wounded fighting for the revolutionary cause. 
 We are discussing our own people, who live in our communities. Every single member of the Committee has constituents who are war pensioners. I hope that there will not be another huge crop of them, but, as my hon. Friend the Member for Aldershot said, small conflicts occur all the time. Many people are deployed in operational theatres, and who knows when there will be another major conflict? However, even if there were only one case, we owe people who have served this country in uniform and suffered as a result of it a better arrangement than that in the Bill.

Desmond Swayne: I thought the Minister was slightly mischievous when he teased Conservative Members for tabling an amendment that would put into effect the Select Committee's suggestions for dealing with the problem, when in reality we supported the Royal British Legion's position. I do not accept that there is a discrepancy. It is perfectly possible to table any number of mutually exclusive amendments and speak to all of them in order to debate an issue. The onus is on the Minister to explain why he proposes changing the system rather than on us to support a particular item from the menu of different possibilities.
 I wonder what personal challenge the Minister has set himself in seeking to persuade us of the merits of his position. Is he planning to persuade us beyond reasonable doubt or merely on the balance of probability? Even on that second and lower standard, his arguments thus far are pretty thin. That it accords with modern practice in the industry is, frankly, not an argument for changing any established system under any form of discipline, never mind a military regime. By changing the standard and burden of proof, we will inevitably alter the number of people who are successful in making claims. Is he suggesting that 
 people who are now in receipt of awards should not receive them because they have them on a balance of probability, and that if they had been required to prove their case beyond all reasonable doubt they would not have received them?

Ivor Caplin: If I was mischievous in teasing out the Conservative party's position, the hon. Gentleman is certainly being mischievous now, because he knows full well that we are not discussing awards that have already been made. I made that point clearly. We are talking about future awards.
 I wonder whether the hon. Gentleman could advise the Committee how long the current system has been in operation and whether he believes that there have been any advances in medical science in that 60-odd years.

Desmond Swayne: To deal with the first point, I accept entirely that this change will not alter past awards, but we judge the future and its effects by our experience of the past. Clearly, if members of the armed forces who secured awards such as those that were given on the basis of Gulf war syndrome—there are some—had been required to prove their case beyond reasonable doubt, they would not have secured awards under the Minister's scheme. Ergo, the scheme would have ensured that members currently in receipt of benefits would not have received them. That is the key point. One is inevitably left with the feeling that the proposals are not about standard practice, but about making savings. The Minister might say that he had no such motive, but if what I have described will be the consequence, I do not doubt that someone, somewhere, had that as a motive when he was framing the provisions.
 The Minister asked me about changes in medical practice, but I do not see why such changes should alter the burden of proof. Of course, medical practice will inform decisions on whether something is subject to reasonable doubt; equally, changes in medical practice and capability may affect the level of the award. In principle, however, I do not see why changes in medical practice and medical knowledge should alter the standard or burden of proof. 
 On time limits, I should like the Minister to explain what effect the proposals would have had in the past. I repeat that we cannot know what effect they will have in future except by considering our experiences of the past. How many claims would have been excluded on the grounds of being out of time as a consequence of the imposition of the time limits?

Julian Brazier: My hon. Friend makes a powerful point. When he spoke about how earlier claims should have been excluded, the Minister shook his head. My hon. Friend's example is absolutely unmistakable: all the claims that were out of time would have fallen automatically, except in certain limited cases. It is clear that a large number of past claims would have fallen. Perhaps the Minister would like to intervene on my hon. Friend after I have done so to say that he accepts that point.

Desmond Swayne: I do not think that the Minister will take that opportunity, but we look forward to his summing up. I would certainly like to know the answer to the question. Indeed, perhaps we should have tabled an amendment on it earlier. Nevertheless, statistics must be available on when in their lives most veterans make their claims. My prejudice is that the great majority would make their claims after the time limits bit in and would therefore be out of time. It is in the nature of things that veterans tend to have such experiences in later life. Nevertheless, if a complaint were attributable to service, it would be quite inequitable for it to be ruled out of time because the veteran did not experience the injury and its consequences until after the Minister's synthetic and arbitrary time limit had elapsed.

Gerald Howarth: I draw my hon. Friend's attention to the fact that the Government have made provision for interim awards. The framework document says:
 ''There are some situations where, from the outset, it is not possible to predict with confidence the long-term prognosis for an individual.'' 
That is why interim awards are proposed, and we understand and accept entirely the logic for them. However, is it not the case that although one cannot predict the long-term prognosis, when an illness first manifests itself, it will in many cases be impossible to say that it is not attributable to something that happened many years previously? There are plenty of medical cases to support that view.

Desmond Swayne: My hon. Friend makes a powerful point. The principle that the prognosis for an individual is not predictable might be accepted, but it also applies when the condition presents itself in the first place, which may well be after the arbitrary time limit that the Minister proposes. The Minister must justify his changes to the system. In the light of the comments that my hon. Friends have made about the exclusive nature of conditions in the armed services, I do not believe that the argument that administrative convenience accords with modern practice elsewhere in the industry will wash.

Ivor Caplin: I am grateful to hon. Members who have taken part in this debate. I shall make some points about it later, but I should first address the assertion of the hon. Member for Canterbury about my Department. It is not a new point; I think that he made it on Second Reading and possibly also last week in Committee. I fundamentally disagree with him, as does my right hon. Friend the Prime Minister, who created the role in question in 2001. The personnel policies of the Ministry of Defence are critical both to those who are veterans now and those who will be veterans in future. The fact that the Department includes the Veteran Affairs Secretariat within it enables it to adopt consistent practice, although it can still be at arm's length to an extent, as happens in America. None the less, as the body is part of a major Department, there is no conflict in discussions with other Departments.
 I was recently in Washington, where I met Anthony Principi, the US Secretary of Veterans Affairs. During an interesting few days, we examined a wide range of issues with the Americans. We in this country are lucky to have the national health service, and our veterans are treated for free and properly. In America and, looking further afield, Australia, that is not the situation. That is why the American veterans' agency built its own hospitals for veterans in 1948. While I was in America, I went to the Walter Reed memorial hospital, which, as many hon. Members know, is dealing with the young men and women who are coming back from Iraq now. 
 That is what the Americans have had to do in order to ensure that their veterans receive free health care in a system that is fundamentally different from ours, and there is an important comparison to be made in that regard. Those veterans have a system of free health care that is similar to the NHS—it was even founded in the same era—and that involves some of the problems that we associated with the NHS until this Government started investing in and reforming—[Interruption.] The Committee would expect me to say that, and it is true. I shall take the booing of the Opposition, but I need say no more.

Gerald Howarth: I am grateful to the Minister for giving way. I am glad that he has visited the US Secretary of Veterans Affairs. I made the point that part of his department's raison d'etre was that there is no NHS in America, so employers have to make such provision. The Pentagon and the Department of Defence serve that purpose.
 Did the Minister come away with the impression that I received when I was in America with the Select Committee? I thought that there was a determination there to look after veterans. As the Member of Parliament for Aldershot, I have many retired service personnel in my constituency. He will know from the letters that he has signed that in far too many cases in this country, individuals have had to struggle against the system in order to get their just desserts. If it had not been for tribunals, they would not have got them at all.

Ivor Caplin: I hear what the hon. Gentleman says. Many cases are under way, and one of the reasons for the introduction of the new compensation scheme was that it would sort out some of those issues. However, let me make a wider point about veterans' affairs. Earlier, some Opposition Back Benchers tried to tease me into a response on something that I said was nonsense. What I objected to was their painting the whole Veterans Affairs Secretariat with the same brush.

Gerald Howarth: No.

Ivor Caplin: That came from the hon. Gentleman's Back Benches. When I talk about the Opposition, I exclude the hon. Member for Hereford—

Gerald Howarth: One cannot divide and rule here.

Ivor Caplin: I am doing a pretty good job. The VAS has had a remarkable seven or eight months as far as I am concerned. If the Committee would like me to go through what has been achieved since I have been in post, I shall happily do so, but I think, Mr. Griffiths, that you will rule me out of order if I talk about Suez medals, £15 million of lottery money and so on. I shall not go down that route today. Within the Ministry, there is independence to act on veterans' affairs, and that is what we are doing—they have a powerful voice. Although we have had some discussion about retired people, in using the term ''veterans'', I also refer to the 24 or 25-year-olds who leave the British Army after five or six years in service. Many of them go on to be reservists, like the hon. Member for New Forest, West.
 I was worried earlier when the hon. Member for Aldershot was going round the Room talking about who had been to Iraq, but forgot the most notable person who had been there.

Julian Brazier: I am sure that none of us ever forgets my hon. Friend the Member for New Forest, West.
 I should like to share with the Minister a quote from a letter dated 13 November. It was written well into the period of the new set-up, which is supposed to do so much for veterans, and it deals with one of the cases that I mentioned—that of Mr. John Kerr: 
 ''Unfortunately, the handling of his case has been nothing short of disgraceful and an insult to a man who served his country with bravery and distinction.'' 
That letter came from Mr. Heaver, who has been a caseworker for many years. The Minister's points about the differences between the US and UK health services were well made, but that is not what we are debating now. We are debating the fact that America has a system involving an arm's length organisation that deals with such matters, whereas the new subsidiary of the MOD is not providing a comparable service.

Ivor Caplin: I simply disagree. I shall not comment on the individual case, but if the hon. Gentleman would let me or my officials have the information, and if we have not already had it, we will look at the matter in the usual way.
 Let me try in the time that is left this morning to go through some of the other points that have been raised. First, there is the issue of the standard of proof. Each of us chose the best bits of the Select Committee report for our own purposes, and there was selective quoting from various people. The hon. Member for Aldershot quoted from this passage: 
 ''We welcome the fact that some of the safeguards within the compensation scheme have been strengthened''. 
He cited the following: 
 ''But our essential concerns about the structure of the compensation scheme have not been addressed.'' 
That was from paragraph 65—he should have included the first line as well. 
 We know that we expose the British armed forces to risk. That point was made by the hon. Members for Hereford and for Aldershot, and we understand it entirely. Of course, the new compensation scheme will pay for injuries that are received during training as well 
 as when people are on military operations. The issue that we have had to consider is whether the balance of probability will allow awards to be made where there is reasonable evidence that injury or death was due to service. The new scheme provides better compensation for the more serious injuries—the point that I made earlier in respect of the Select Committee report. 
 In some respects, the current compensation scheme does not achieve the same purpose. For instance, we are not allowed to pay compensation while the member is still in service. Under the new scheme, we would be able to do so, so there is a shift in emphasis in respect of compensation. I hear what hon. Members are saying about not liking the standard of proof because it is the same as in the civil courts. Well, it is, and I made the point to the hon. Member for New Forest, West. I believe that 1943 was the answer to the question that I asked him about when the current situation started to exist—that is, more than 60 years ago. Medical science and technology have moved on considerably during that period. I know that he is a reasonable man and that he would accept that. 
 The Royal British Legion claims that 60 per cent. of claims would fail under the new compensation scheme. We have been in discussion with the legion about the claims. We have had correspondence at an official level and I have met the legion to discuss the matter. I do not accept the basis of its present conclusions. First, the sample that it took was probably too small and not truly representative. We have made all those points to the legion, which made assumptions about the effects of the time limits that do not reflect the current behaviour of recently retired service personnel. 
 Long time limits and the beyond reasonable doubt standard of proof—the current situation, which the Opposition support—work against proper evidence-based decisions. That is why we have reached our conclusion about the standard of proof. I understand that the tariff situation is a key issue. The hon. Member for Aldershot, on whom I intervened, made a very interesting contribution on the tariffs, which I wholly understand and accept. I said at the time that there were 15 levels of tariff, but we need to keep engaged and open on the matter. 
 In new clause 16, to which I shall return later, the hon. Gentleman suggested five years after introduction of the provision as a time limit for coming back to Parliament. I have to say to him that we may have to make further changes as science and medicine move on. I shall therefore resist his proposal, not necessarily because I disagree wholeheartedly, but because I do not want the Bill to tie us down to waiting five years. The hon. Member for Hereford made the same point: we may have to review the provision a year or so after its introduction, and if so, we will need to be able to come to the House and make some appropriate changes to the tariff situation so that we can properly reflect that. This issue is not a closed book.

Gerald Howarth: The force of the Minister's argument is overwhelming. He is absolutely right. I accept what he says about the idea that he should have to wait for five years. That is why my new clause has been so helpful, because it says:
 ''The Secretary of State shall report to Parliament on the operation of any tariff-based compensation schemes not later than five years''. 
In other words, I have framed the new clause entirely consistently with his argument, which he is so right to advance. I hope that that is helpful to him.

Ivor Caplin: I note that helpfulness is breaking out in all parts of the Committee this morning. I have to say to the hon. Gentleman that if I accepted new clause 16, we would be tying our hands in terms of the possible need to make changes sooner than in three or five years' time. He is talking about reporting to Parliament, but as the Minister responsible, I want to be able to come to Parliament by way of a statement or an answer to a question and make changes to the tariff if they are shown to be necessary. To be tied to some sort of reporting structure is incredibly unhelpful in maintaining a review. I suggest to the Committee that, every year or so, we shall be coming back and making statements about the situation.

Paul Keetch: Can we be clear on this point? Is the Minister with responsibility for veterans saying that he envisages that, perhaps on an annual basis, he or his predecessors will return to Parliament to give either a written statement or a statement on the Floor of the House about any changes to the tariff that the Government might envisage? If that is what he is suggesting that Government policy will be for the remainder of this Labour Government, however long they last, it would be a helpful point to have on record.

Ivor Caplin: I think that the hon. Gentleman meant to say successors, not predecessors, but who knows in this game?
 While the Government remain in power and while I am a Minister, we will come back to the House regularly if and when we need to change the tariff. I do not want to say that that will be an annual event; it may occur once or twice a year or once every 18 months. Nevertheless, I want the flexibility that new clause 16 would remove. I shall therefore ask my hon. Friends to resist it if necessary. I hope that the Committee is clear about Government policy on the tariffs. 
 We talked about the standard of proof. I want to make one further point in reply to the hon. Member for New Forest, West about what happens in cases of late illnesses and so on. We would expect people to claim in such cases, but the compensation conditions set out in the framework document recognise that late onset can arise. Separate provisions have been made for that in terms of medicine and the way forward. 
 I made an important point about the change in compensation. At the moment, people have to leave service until we can compensate them with a lump sum under the war pensions scheme. Under the new scheme, we will be able to pay them a lump sum while they are in service. That seems an eminently sensible and practical way forward.

Vernon Coaker: On a point of order, Mr. Griffiths. I apologise for interrupting my hon. Friend. It might be helpful to announce that the Programming Sub-Committee will meet at 2.20 pm, prior to this afternoon's sitting.

Win Griffiths: I thank the hon. Gentleman for that.

Ivor Caplin: I shall go through the amendments. Amendment No. 4, the first in the group, is similar to amendment No. 2, which the Committee decisively rejected in a Division—at least, we had a majority, and the amendment was debated and defeated.
 I have already touched on new clause 16. I hope that when he winds up, the hon. Member for Aldershot will accept what I said about flexibility and the need to report to Parliament. I take my responsibilities to report to Parliament seriously. He knows that that is the case because he asked me last week about a written statement—it was nothing to do with this group of amendments—and he received a letter shortly afterwards with a hand-written apology for not being able to deal with the matter in Committee that afternoon. I take those obligations seriously. As I told the hon. Member for Hereford, I am committing the Government to reporting changes on a regular basis. I therefore hope that the hon. Member for Aldershot will be prepared not to press new clause 16. If he seeks to press it to a Division, I shall ask my hon. Friends to reject it on the basis that it would tie down the Government too much. 
 I am confused about new clause 23. The hon. Member for Aldershot might have to explain it further, because subsection (1) seems to seek to make the standard of proof more challenging. I am not sure whether that is the British Legion's position or whether it is his position. It may be a drafting error, but it would make matters more challenging, and I shall invite my hon. Friends to resist it if necessary. 
 New schedule 4 takes us back to whether the framework document should be part of the primary legislation. I have made my position clear on the need for the primary legislation to be enabling and for secondary legislation to follow. I shall therefore ask my hon. Friends to resist the new schedule. 
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.